ASEAN KEY DESTINATIONS
Thai investors flock to gold
Responding to rising interest in gold, The Thailand Futures Exchange (TFEX) later this month will allow investors to put up trading deposits in US and Singapore dollars for the first time to ease the impacts of surging capital inflows.
As the dollar continues to weaken in light of the Federal Reserve's decision to spend $600 billion buying US government bonds, gold has emerged as an attractive alternative investment. Its trade has been volatile in recent months due to market uncertainties and concerns about the recovery of developed economies. Global gold prices also traded yesterday at a record US$1,414 an ounce.
Before yesterday, the local gold price peaked in mid-October at 19,500 baht per baht weight. The selling price closed yesterday at 19,700 baht after topping 20,000 baht earlier.
"Gold is seen as a safe haven amid uncertainties and its prices have become more volatile. They could rise to $1,600 or 21,000 baht by the end of this year. On the other hand, if the US economy recovers strongly, the price could dive to $1,100," said Boonlert Siripatvanich, president and CEO of Ausiris.
However, a sharp rebound of the world's largest economy is unlikely over the next 3-6 months. For domestic gold bars, 18,000 baht could be the next price barrier. Investors are warned, however, that the price could drop sharply by 1,000 baht in one day if the US policy rate is raised.
YLG Bullion International, a member of TFEX, expects gold prices to reach $1,500 to $1,600 per ounce in the first half of next year, while for this year $1,450 should be the peak, according to vice-president Pawan Nawawattanasub.
Gold prices are rising due to the weakening US dollar on the back of the Fed's quantitative easing measure, she said.
"When coupled with the previous round of QE of about $1.7 trillion, the market could face high inflation, prompting funds to shift their investments to low-risk assets such as gold and others," she said.
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