Domestic gold prices, which peaked at 34,550 baht per baht-weight during the Chinese New Year, should be on an uptrend again in May when the Federal Reserve is expected to start cutting US interest rates, pushing global prices to US$2,100 per ounce, say traders.
Domestic gold prices have eased by 300 baht from the Lunar New Year peak, as global prices edged down to $2,019, said Jitti Tangsitphakdee, president of the Gold Traders Association.
The expected cut of the US policy rate by 0.25% in May should clearly drive up domestic gold prices, he said. The Fed is expected to slash the rate at least two times this year, reducing US rates by 0.5%, said Mr Jitti.
"Once the Fed starts cutting the rates, gold prices will have a resistance level of $2,100 per ounce and support level at $1,975," he said.
In the future, Mr Jitti predicts domestic gold prices could reach 40,000 baht per baht-weight, though not during this year.
As global geopolitics have intensified and central banks around the world strengthen their gold reserves, there is a growing probability of gold supply falling short of demand in the long term, he said.
Kritrat Hiranyasiri, chairman of MTS Gold, shared a similar view, saying global gold prices should move sideways in March and April after trading in a range of $2,000-2,045 per ounce recently.
"The Fed is expected to cut the rate in May or June at the soonest, instead of March as forecast earlier," he said.
Shaokai Fan, head of Asia-Pacific (ex-China) and global head of central banks at the World Gold Council, said if the US does indeed have a soft landing as many analysts predict, gold demand would remain robust as the opportunity cost for holding gold decreases.
Coupled with continued central bank buying and strong retail demand in many key markets, gold demand should continue to be supported, said Mr Fan.
Despite a slowing economy, gold demand in China was quite strong in 2023, with jewellery demand rising 10% year-on-year and retail investment demand up 28%. The weak property and equity markets made investors seek other opportunities, with gold benefiting as a result, according to World Gold Council.
"Intensifying geopolitical tensions are a key theme for investors in 2024, so gold's role as a safe-haven asset will likely continue to affect its performance this year," he told the Bangkok Post.
Although gold jewellery demand in Thailand dipped by 2% year-on-year in 2023, demand among gold investors was resilient, rising 13%.