Renewed hostility between the US and Iran, which has caused oil prices to remain elevated longer than expected, has triggered a fresh downturn in gold prices, potentially dipping to US$3,500-3,600 an ounce or 60,000 baht per baht-weight domestically, says Kritcharat Hirunyasiri, chairman of MTS Gold.
"The prolonged Middle East conflict and elevated oil prices have wrongfooted all previous predictions for gold prices and the global economy," he told the Bangkok Post, adding renewed attacks in Iran, especially those on oil fields, are causing a greater impact on oil prices than during the onset of Russia's war with Ukraine.
According to Mr Kritcharat, the longer oil prices are elevated, the higher the probability the Federal Reserve will hike interest rates.
The market predicts a Fed rate hike over the next three months, he noted.
Elevated crude oil prices can accelerate inflation, and while gold is viewed as a hedge against inflation, higher interest rates tend to weigh on the non-yielding metal.
Bullion plunged to $4,022 an ounce on Thursday, the lowest since Nov 21, before rebounding to $4,089 later in the day, down 0.5% from the previous session. Over the past 30 days, gold was down 12.5%.
MTS Gold, one of Thailand's top three gold traders, forecasts the gold price support range at $3,500-3,600 an ounce.
The Gold Traders Association reported the local price dropped by nearly 2,000 baht per baht-weight in early trade on Thursday. After 29 adjustments, gold bar was quoted at 63,900 baht per baht-weight.
"This full-blown price downturn could last until the end of the year," said Mr Kritcharat.
"If the Fed hikes US rates as the market anticipates in December, the price of domestic gold bar should not fall below 60,000 baht per baht-weight."
Hua Seng Heng, Thailand's largest gold trader, predicts the next price resistance level at $4,115 an ounce.
"If gold falls below $4,000 an ounce, we will probably see the price drop even further," noted the trader.
