Global gold prices have fallen by 30% year-to-date, with the lowest level for the year expected within a range of US$1,150 to $1,100 an ounce amid signs of a US economic recovery.
Kritcharat Hirunyasiri, the chief executive of MTS Gold Group, said as gold is considered a new alternative investment, many Thai investors have little experience in handling their portfolios in a down market.
Locally, gold prices rose by 800 baht per baht-weight (15.244 grammes for gold bars and 15.16 grammes for ornaments) but are down by 21% since early this year due to the appreciating baht, he said.
Trading has dropped by 21% since early this year.
The local currency appreciated to 28 to the US dollar early this year but has since weakened as foreign investors have repatriated their investments.
He said imported gold bars have lost 40% of their value since the price started to fall late last year.
However, MTS's sales volume is on a par with last year at 400 billion baht.
Pawnshops have been the hardest hit since April.
People pledged gold at high prices and never returned to redeem it, as they could buy new gold more cheaply.
Pawnshops had paid 22,000 baht per baht-weight on average, but in late April the price fell sharply to 19,000 baht.
Over the past eight years, gold prices were on an upward trend, with an accumulated correction period of around 2.2 years.
Mr Kritcharat said even in the downward trend, the lowest price should not be less than gold mines' operating costs in a range of $1,000 to $1,000 an ounce.
Gold futures trading volume has been 60% lower than last year.
"The volume of futures products has been quite thin, as Thai investors are not familiar with short selling when gold prices fall," said Mr Kritcharat.
The company's research department said the US quantitative easing tapering in the coming months is a factor of the price slump.