KHON KAEN - Weeks of volatility in gold prices because of the conflict in the Middle East have taken a toll on activity at gold shops in this northeastern province, says a local proprietor.
Global and local gold prices have fallen by more than 12% since May 1, and are down nearly 25% from the all-time highs reached in late January, a month before the US-Israeli strikes on Iran.
Gold was trading on Wednesday at 62,950 baht per baht-weight (15.2 grammes), compared with 72,000 on May 1 and the all-time high of 81,600 reached on Jan 29.
In addition to the conflict, concerns over inflation and a strengthening US dollar have also weighed on the gold market, said Ekkalak Chanawirat, 47, the owner of Uthen Gold Shop.
Whenever buying interest emerges, it is met with continued selling pressure, preventing prices from returning to their previous peak, even for short periods, he said.
When prices fall, customers rush to buy, building up stocks in anticipation of profit. But once prices drop by 1,000 or 2,000 baht a day, buyers grow uncertain about whether prices would keep falling or start rising again.
“Looking at the long term, most analysts believe there’s a chance prices will climb back to their peak, but every time they rise, there’s been consistent sell-off pressure,” Mr Ekkalak said.
“There’s no factor strong enough yet to drive prices up that much, and now there are concerns over US inflation weighing on investors too.”
Mr Ekkalak said people in Khon Kaen are still keen on buying and stockpiling gold bars, with demand growing.
He said the price decline between May 1 and July 1 had been considerable compared with movements over the past five to six years.
Before the Middle East war began in late February, daily fluctuations of 100 to 200 baht were normal, he added.
