Gold prices will keep rising at a marginal pace until Chinese New Year in light of the softer dollar as uncertainties over US President Donald Trump's inwardly-focused policies have forced investors to turn to a risk-averse mood.
"We expect gold prices will rise slightly while the US currency will depreciate gradually after Trump's inauguration. Even though he confirmed his stance to protect US interests and "America comes first", it is unclear whether his stance will affect trade, tax immigration and foreign affairs. Such concerns stoke demand for gold which is a safe haven," Pawan Nawawattanasub, chief executive of YLG Bullion International, said.
Gold prices always move in the opposite direction to the US dollar.
However, she warned investors to be careful about a selling spree of the precious metal from time to time after the Federal chairwoman Janet Yellen signalled a three-time rate increase this year.
If Mr Trump reveals policies that can earn investors' trust, a selling spree will pressure gold prices as investors turn to risk-on mode, she said.
Chinese New Year, which falls on Jan 27, will make gold purchases become more active but it would not have a material impact on price, said Ms Pawan.
Gold prices will have support at US$1,180-1,165 an ounce or translating into domestic prices of 19,700-19,400 baht per a baht-weight of gold, and resistance at US$1,233-1,250 or domestic price at 20,600-20,900 baht, she said.
The precious metal rose 5.8% or $66 per ounce from last year's closing price to $1,217.81 an ounce yesterday and peaked at $1,218.64 per ounce. For domestic price, gold bullion increased by 400 baht per baht weight of gold or up 2% from the closing price at the end of last year.
Jitti Tangsitpakdi, chairman of the Gold Traders Association, agreed with Ms Pawan that the gold price upside gain is capped.
Those who invest for short-term investment are still able to pile up gold, but they need to closely watch Mr Trump's policies, which could affect financial, gold and currency markets.
"I don't think the Fed will raise interest rates due to uncertainty over economic growth. If the policy doesn't change much, gold price will rise slightly," he said.
Globlex Securities Research said that US dollar has weakened due to uncertainties and investors should watch the Fed's next policy rate call on Feb 2.