The price of gold fell by 2,000 baht per baht weight (15,2 g) in just over a month, because the price of the Thai baht increased by more than 7%.
The baht is Thailand’s currency unit, but it is also a unit of mass used in gold trading, equivalent to 15.2 grams.
The Gold Traders Association (GTA) notes that prices could continue to fall if the value of the baht appreciates.
This Thursday, December 12 at 10:36 a.m. (Thailand time) 1 euro is worth 35.52 baht and 1 US dollar is worth 33.80 baht.
See: Thai Baht THB price
A sharp increase over the past month, on Thursday November 14, 1 euro was worth 36.94 bahts and one American dollar was worth 35.03 bahts.
It should also be added that the price of the euro is falling against the dollar; currently, 1 euro is worth 1.05 US dollars.
GTA Chairman Jitti Tangsithpakdi said domestic prices have been moving in the opposite direction of the global price of the precious metal, which is currently trading around US$2,520 per ounce.
The association said the price of gold per baht weight in the country fell by 100 baht to 40,050 baht.
“The domestic price has fallen as the baht has strengthened since the end of July,” he said.
“The baht quickly appreciated by around 7%, which affected the price of gold in the domestic market, and is why it does not match the increases in the price of gold. gold on the world market.
If the Thai currency appreciates by one baht against the greenback, the domestic price of gold is affected by about 3,000 baht,” Mr Jitti said.
The price of the baht could rise further
The Thai baht rises against the dollar. Illustration: Kaohoon International.
“If economic data in the United States continues to be weak, the Federal Reserve will opt for a sharp reduction in interest rates.
This will depreciate the dollar and cause the baht to rise, thereby lowering the price of gold in the domestic market.
Investors are advised to accumulate the precious metal as the domestic price is low ahead of the Fed meeting scheduled for the end of the month,” Jitti added.
An analysis by local trader Hua Seng Heng found that the global price of gold has risen due to the weakening dollar and falling yields on US government bonds.
The dollar depreciated as the United States revealed that private sector Automatic Data Processing employment in August was below market expectations, falling to a level not seen since January 2021, according to the trader .
Another factor is that Russia is preparing to purchase foreign currencies and gold worth more than $1.98 billion, Hua Seng Heng noted.
The trader expects the global gold price to rise if the Fed cuts interest rates by 25-50 basis points to 4.75-5.00% at its September 18 meeting.
Baht rise hurts tourism, exports
A customer exchanges currency at a Travelex branch in Bangkok. Photo: Bangkok Post.
The sharp rise in the baht brings Thailand back to the problems it faced a few months ago, before the Bank of Thailand’s surprise interest rate cut last October.
See: The baht should fall: the Bank of Thailand reduced its interest rates
This new increase threatens to slow down the country’s main economic drivers, namely exports and tourism.
It is currently unclear whether the Bank of Thailand intends to cut interest rates further to deal with the problems as the peak tourist season has just begun.
Source : Bangkok Post
