The domestic gold price could spike to 27,500 baht per baht-weight over the next six months, fuelled by growing risk-off sentiment, the weakening baht and coronavirus concerns, says MTS Gold Global Trading.
Gold remains a safe-haven asset with low price fluctuations compared with other asset classes, said managing director Nuttapong Hirunyasiri.
If the World Health Organization classifies the coronavirus outbreak as a pandemic, this will send shock waves through global equities and another gold price rally will be on the cards, Mr Nuttapong said.
The coronavirus has spread to Italy, South Korea and Iran, sparking fears of a global pandemic and sending gold prices to a seven-year high of US$1,689 per ounce as of Monday.
The foreign exchange rate between the baht and the US dollar should also be taken into account in the gold price outlook, Mr Nuttapong said.
"Gold has provided a return of 10% year-to-date," he said. "Prices could spike to a resistance line of $1,700 per ounce."
He said prices of other commodities, such as oil, steel and rice, have declined amid expectations of tepid consumption and a prolonged virus epidemic.
The outbreak could be the catalyst for an economic crisis in Europe, where the health of some economies is not strong, Mr Nuttapong said.
Investors have moved into gold over fears that the virus emergency will take a toll on China's economic growth, he said, while governments are expected to sell holdings of US treasury notes to generate greater liquidity.
"This will pressure the US dollar's value but be a boon for gold prices in the future," he said.
Ekpawin Suntarapichard, vice-president of Maybank Kim Eng Securities Thailand, suggests investors allocate 60% of their portfolio to gradually accumulate equities, especially Chinese and US names, because of cheaper valuations.
Allocations to cash and bonds are recommended at 10% each, with the remaining 20% going to alternative assets such as property funds, real estate investment trusts and infrastructure funds, as lower interest rates provide a window to reap gains from the wider gap between dividend yields and the policy interest rate, Mr Ekpawin said.