No end in sight for gold skid

No end in sight for gold skid

The local gold bullion price sank to as little as 17,700 baht per baht-weight yesterday after the global spot price plunged to a 34-month low of US$1,180.50 an ounce, but gold traders say the worst is yet to come.

People wait to buy gold at a Hua Seng Heng branch on Yaowarat Road after prices fell sharply yesterday. PAWAT LAOPAISARNTAKSIN

Spot bullion in the domestic market swung wildly. The price of gold bullion sold to gold shops closed at 17,700 baht per baht-weight, down from 18,150 baht the day before.

Gold bars sold by gold shops closed at 17,800 baht per baht-weight, down from 18,250 baht on Thursday.

Global spot prices have dropped by 25% since April 1 on worries that the US Federal Reserve will begin cutting back its stimulus. Gold is on pace for its biggest annual loss in over three decades after a 12-year winning streak.

Fed chairman Ben Bernanke last week said the central bank would begin winding down its $85 billion a month in asset buying this year and halt purchases entirely next year if the US economic recovery were sustained.

Kritcharat Hirunyasiri, the president of MTS Gold, said the downward trend could continue, with a slide to $1,100 an ounce this year possible.

A selling spree by SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, and anxiety over the Fed's exit strategy have whittled down investor demand for gold.

"With the downward trend, investors should sell on rebounds and buy on weakness to earn a profit," said Mr Kritcharat.

Local enthusiasm for physical gold has waned since April's big sell-off, when global spot gold tumbled to a two-year low and the domestic price dived below 19,000 baht on April 17, the first day gold shops reopened after Songkran.

On that day, investors packed gold shops nationwide after the price slide.

Tanasin Gleeblumjeak, the managing director of Ausiris Futures, shares the view of gold continuing its downward trend.

His forecast is for gold to slump to $1,150 an ounce for the rest of the year.

"The price falls very fast and a rebound could emerge soon, although we haven't seen any sign yet," he said.

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