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Experts offer gold guidance

by qualityeducation
A long queue formed at a Hua Seng Heng gold shop on Yaowarat Road in late July. Gold prices rebounded yesterday from a three-week low on Wednesday. (Bangkok Post photo)

The domestic gold price rebounded after hitting a three-week low Wednesday, with experts advising long-term investors to sell at a profit once the price exceeds the fundamental value.

Friday’s gold bullion selling price was 28,550-28,650 baht, while the spot gold price rebounded to above US$1,900, according to the Gold Traders Association.

Prices on Wednesday had dropped to 27,500 baht, their lowest since July 21, declining from above 29,000 baht. The day before, Russia became the first country to announce a vaccine for the coronavirus, dropping global spot prices by $116 to $1,873.74.

Hua Seng Heng group chief executive Tanarat Pasawongse said more people started selling when gold prices had a hard correction on Wednesday of last week. On Monday most people bought back in, fearing they could miss out on further gains as global and domestic prices rebounded.

“For long-term investors, we have a safer view that they should wait for the spot gold price to correct at about $1,850,” Mr Tanarat said. “That’s about 28,000 baht for 96.5% purity at the local price to start a new round of long collection.”

Tipa Nawawattanasub, chief executive of YLG Bullion International, said that if the gold price in the short term moves sideways-up, it could test the high for more than one month. The price is trending upwards in the next 1-2 years as global economies continue to slow.

Investors could accumulate gold at $1,850-1,900 (27,200-28,000 baht) and take profit when the price touches the resistance line at $1,950 (28,750 baht), Ms Tipa said.

Nuttawut Wongyaowarak, vice- president for research at Globlex Securities, said the vaccine for the coronavirus is a key factor in the gold price.

“Gold price volatility could be higher if the US, Japan, Germany — countries with a good track record of medical innovation — announced a successful vaccine,” he said.

Mr Nuttawut said gold prices moved drastically from the news of the Russian vaccine, despite the country’s unproven track record in healthcare.

As the vaccine is not yet approved globally, he suggested selling for profit when the spot gold price reaches $2,050-2,200 or a domestic price of 30,500-32,000 baht.

If the vaccine is globally approved, the upward trend of gold prices could end because governments will be able to reopen their economies and investments in safe commodities will be less attractive, Mr Nuttawut said.

Such an event could cause gold to decline to $1,400-1,600 and 20,000-23,000 baht domestically, he said.

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