Thai Economy NewsThai Industry NewsThai Stocks NewsThailand Energy & ResourcesThailand Finance & Banking

Gold price plunges on Europe fears

The domestic gold price fell by as much as 1,300 baht yesterday to 24,000 baht per one-baht weight (15.16 grammes) on volatile trade with over 10 adjustments, as traders noted the price is likely to fall further on European debt crisis concerns.

The local price moved in line with the global market as gold nosedived by as much as US$100 an ounce yesterday to a low of $1,536, prompting investors to rush to gold shops as the price fell, said Jitti Tangsithpakdi, president of the Gold Traders Association.

“Prices moved as much as $20-30 per ounce in a few seconds,” he said, adding that the prices slipped below the $1,600 mark during the day partly due to tight supply in the global market, he added.

“Prices will remain volatile the next couple days. Buyers looking to take advantage of the lower prices should be cautious,” Mr Jitti added.

Kritcharat Hirunyasiri, the managing director of MTS Gold, said global gold prices have been declining since Thursday on worries over the European debt crisis.

“We just celebrated the honeymoon of $1,840 last Thursday before the price started falling. It is a global phenomenon of the money market,” said Dr Kritcharat, also a deputy secretary-general of the Gold Traders Association. “Some of these are panic sellers.”

The falling price is more evidence of huge capital outflows in addition to massive sell-offs from the stock market as investors choose to keep the US dollar.

Even though the Thai economy has brighter prospects than the US, the baht has recently depreciated from 29 to the dollar to 31.

“The baht could depreciate further in the near term, and we predict gold will fall to $1,520 per ounce,” said Dr Kritcharat.

Tanit Sorat, vice-chairman of the Federation of Thai Industries, said industrialists are more concerned about a knock-on effect of European debt on other economies, especially the US.

“The US is largely connected with European economies,” he said, adding that Thailand’s direct exports to the EU and US are just 9% and 10% of the country’s overall shipments, respectively.

But the US is a big trading partner of Japan, Asean and China, which together account for over 40% of Thailand’s exports.

“The US economy is still in the ICU with high unemployment of about 10%. The global concern is the US situation will worsen due to the EU issue, affecting other economies,” said Mr Tanit.

Source: Bangkok Post

ThaiVest Editorial Team

Leave a Reply