MTS: Bullish gold trade in medium term
Firm preparing for new opportunities
MTS Gold Group, one of the country's largest bullion traders, predicts domestic gold trading volume will remain bullish in the medium term because of sideways price movement and an upward trend that could hit 30,000 baht by next year.
Nattapong Hirunyasiri, chief executive of MTS, said the company is preparing for new business opportunities from dollar-gold trade, silver and rubber futures, which regulators are likely to approve trading in this year.
He said a spike in trading at the beginning of next year would be supported by a new US stimulus package and quantitative easing. The US government is expected to inject US$1.5 trillion in the economy by the end of this year, though a national election has made the situation volatile.
"The global spot gold price could test $2,000-2,070 per ounce [about 30,000 baht per one-baht gold weight] again this year," said Mr Nattapong. "In the next year, it could touch $2,000-2,300 an ounce or 33,000-34,000 baht for the domestic price."
He said volatility stemmed from the US political situation and progress made in the development of a Covid-19 vaccine, which could lead to a hard correction by $100 before a rebound.
Mr Nattapong suggested buying at a price of $1,800-1,850 (or 27,000-27,500 baht) for a medium return.
"The domestic gold market is still active and continues moving to online trade. However, retail investors are buying smaller amounts as the price is higher and purchasing power has declined," he said.
For the first nine months this year, trading of gold online grew by 200%, contributing about 20% of total trade volume and value, with traditional channels contributing the remaining 80%.
Mr Nattapong said the company is focusing on three strategies: the development of technologies such as artificial intelligence and big data; global connections with foreign partners; and new business opportunities from an upcoming regulator decision to allow investors to sell gold in US dollars as well as the Thailand Futures Exchange launching silver and rubber futures this year.
"We believe investment markets in the next 5-10 years will differ from today. All investments will be interlinked and more diversified. The dollar currency role will decline. Thai businesses are facing challenges and competition from foreigners and we must prepare in advance," he said.
Mr Nattapong said today the company specialises in gold and precious metals, both physical trade and futures, however commodity futures will likely grow quickly in the future.
MTS Gold wants to build a large, strong commodities futures market because this is a key factor to supporting the country having price bargaining power in global markets, he said. These is an important factor in addition to being a large commodity producer and exporter.