The Stock Exchange of Thailand is likely to establish the planned spot gold exchange alone after rejecting a proposal that the Gold Traders Association (GTA) hold the lion's share.
The latest talks on the physical gold bourse's shareholding structure failed to reach a conclusion, increasing the likelihood of a solo move by the SET to enable it to manage and control trading more easily, GTA president Jitti Tangsithpakdi said on Wednesday.
The GTA had proposed holding a 70% stake and offered the SET 30%.
However, talks between the two parties will continue, Mr Jitti said.
"We want to know the details of the exchange's trading function, as this could affect GTA members," he said. "We'd like to remind the SET that the spot gold exchange is unlikely to succeed without gold dealers' participation, as we have long been in the gold industry."
A new round of talks between the SET and GTA will be held after next week's Lunar New Year.
Mr Jitti admitted the GTA could not operate clearing and settlement systems, provide contract trading standards or gain credibility like the SET.
SET chairman Sathit Limpongpan said the bourse was always open to GTA participation in setting up the spot gold exchange, as it could play a crucial role as a market maker in providing trading liquidity.
The SET is also seeking Bank of Thailand approval for settlement in other currencies, he said.
In the meantime, Mr Jitti estimates the gold price is now on a lengthy downward trend and warned those who had bought gold bullion since 2011, when the price was above 25,000 baht per baht-weight, to sell when the price rebounds.
"Investors should sell when the gold price rises and buy when it's down, but it's difficult to see the price reaching previous highs again," he said.
Thailand's gold imports were halved last year from the previous three years. Only 159 tonnes were imported into Thailand in 2014, down from 318 tonnes in 2013 and 300 tonnes in both 2012 and 2011.
Local investors are estimated to have held at least 400 tonnes of gold in the past two years, based on exports of 93 million tonnes last year and 111 tonnes in 2013.
Gold's volatility is fairly high this year, with the GTA changing the price as many as nine times a day. The precious metal has peaked at 21,150 baht per baht-weight and hit a trough of 17,750 baht this year.
Thasana Boonkwan, head of the Gold Research Center, said the global price's support is US$1,230 to $1,250 an ounce this month, with resistance at $1,340 to $1,360.