Local gold prices yesterday plunged to the lowest level in almost two years at 21,245 baht per baht-weight (15.244 grammes) thanks to the stronger baht and the sharp fall in global gold prices, as gold experts expect a bear market after a decade-long bull run.
Employees of Chin Hua Heng Goldsmith in Bangkok’s Yaowarat area assist customers in picking gold ornaments. World gold prices have plunged continuously since the start of the year by some US$30 an ounce, bringing down selling prices in Bangkok to 21,550 baht per baht-weight (15.244 grammes). PAWAT LAOPAISARNTAKSIN
With signs of further decline in global gold prices, the local gold price could enter a long-term correction, said Sanya Harnpatanakitpanich, Globlex Securities' vice-president for derivatives development.
Globally, gold dipped for a third straight day, nearing a bear market after 12 years of gains, on concerns that investors are seeking higher returns in other assets. Gold for immediate delivery lost 1.1% to US$1,540.29 an ounce, the lowest level since last May 30, according to Bloomberg.
Mr Sanya said it is good timing for real long-term investors who want to keep gold as a safe-haven asset, as the gold price cycle takes a decade before entering a new cycle.
"Normally, an upward cycle takes 12-15 years before entering a stable phase for 10-20 years, depending on the global economy. Gold prices rose for a 13th year in a row, to 27,100 baht from 21,400 baht, so it's possible for gold to enter a correction mode," he said, adding that other risky assets such as oil also declined.
Ausiris chairman Boonlert Siripatvanich said the steep decline resulted from external uncertainty such as tensions on the Korean Peninsula and anxiety about the US and euro-zone economies.
"The market will keep a watch on US non-farm payroll numbers this Friday, as the figure will signal whether the Federal Reserve will keep pumping money," said Mr Boonlert.
He said gold prices are expected to keep slumping if the US does not inject fresh money to the system.
The next support lines are tipped at $1,535 an ounce and then $1,522, said Mr Boonlert.
"The level of $1,522 has seen tough support over the past three years. Gold prices will be down long term if they plunge below that level," he said.
Mr Sanya said investors who trade based on global gold prices should be concerned about currency risk, while domestic gold investors must take into account both the currency rate and the gold price risk.