The price of domestic gold continues to reach all-time highs as prices quoted in US dollars surge past US$2,000 an ounce, with month-to-date online gold futures logging heavy trading volume.
The price of bullion with 96.5% purity has soared to 29,700 baht per baht-weight of gold, while the price of gold ornaments has rocketed to 30,200 baht.
The reference prices for domestic gold were altered 10 times on Wednesday.
Tipa Nawawattanasub, chief executive of YLG Bullion and Futures, said the company forecasts the gold price to reach $2,100 an ounce within two months, while Goldman Sachs is even more bullish and sees the price rising to $2,300 in 2023 because of the pandemic and the global economic slowdown.
“This time of crisis affects economies all over the world and will be worse than the 2008 subprime mortgage crisis, further entrenching gold as a go-to safe-haven asset,” Ms Tipa said.
She said the gold price has surged from $1,517 an ounce early in the year to $2,030 on Wednesday, up 34% year-to-date, while the domestic gold price hit 30,000 baht per baht-weight.
SPDR, the largest gold fund, has also continued to raise the proportion of gold in its portfolio since earlier this week at an average price of $2,010-$2,020 an ounce, buoyed by how more companies are filing for rehabilitation under Chapter 11 of the US Bankruptcy Code and flaring tensions between China and the US, Ms Tipa said.
The rallying cycle of the precious metal could come to a halt if a Covid-19 vaccine is successfully developed, she said.
Thailand’s gold futures have continued to see heavy trading volume in line with the surge in bullion prices.
Month-to-date trading volume was 35,682 contracts on Wednesday on the Thailand Futures Exchange, compared with 34,681 contracts in the whole month of July.
Nattawut Wongyaowarak, vice-president of Globlex Securities, said the trading volume of gold online futures has significantly increased from fewer than 10,000 contracts a day at the start of the year to about 40,000 daily at present.
He said speculative traders continue to invest in gold, with inflows poised to continue until the price reaches $2,250.
Long-term investors should wait to invest until there is a correction, Mr Nattawut said.
The massive explosion that rocked Beirut, Lebanon’s capital, was not a factor boosting the price of gold on Wednesday, he said.
“The bullish cash remains overwhelming for both metals [gold and silver], even at these lofty heights,” said Jeffrey Halley, senior market analyst for Asia-Pacific at forex firm Oanda. “US real yields continue to fall deeper into negative territory, with the pandemic and Washington DC impasses thrown in for good measure.
“Pullbacks are possible from here, quite possibly deep ones; especially if the dollar corrects higher on the currency markets against the major currencies, as the charts suggest.”