The Government Pension Fund (GPF) has crept into gold investment to generate better returns after seeing meagre results from low-risk assets.
The GPF has invested about 1% of the 420 billion baht in total assets under management in gold, said GPF secretary-general Srikanya Yathip.
Gold investment is a minor part of the GPF's asset allocation, she said, as the fund still invests mostly in low-risk assets.
The fund will continue to invest a small amount in gold as a way to hedge against inflation and capture capital gains, Ms Srikanya said.
She said the GPF began investing in gold two months ago when the price was about US$1,800 an ounce.
The investment in gold is a short-term strategy, she said, and factors that affect gold prices will be watched closely.
The GPF will have more flexibility after the government approved letting the fund invest in high-risk assets, both onshore and offshore, as 40% of the portfolio, up from 30%.
The amended investment regulation takes effect in October.
Gold price movements have been volatile against the backdrop of a faltering global economic recovery and the persistent Covid-19 pandemic.
The GPF's view is that gold still has upside amid unchanged global economic factors and low interest rates driven by monetary policy easing.
Gold previously rose past $2,000 an ounce as investors sought safe-haven assets at a time of global uncertainty.
Tipa Nawawattanasub, chief executive of YLG Bullion and Futures, said gold prices are likely to fluctuate in the short term after SPDR Gold Trust and other big investors started taking profits through sales of their bullion holdings.
But the long-term gold outlook is to the upside on the back of macroeconomic developments like global monetary policy easing, low interest rates and the geopolitical conflict between China and the US, Ms Tipa said.
Selling pressure in the gold market picked up after the minutes from the US Federal Reserve's July meeting showed reluctance from the Fed to cap bond yields, according to gold dealer Kitco Metals.