The domestic gold price was down 300 baht to 30,250 baht on Wednesday, while spot gold stood at US$1,772 an ounce, a six-month low.
Gold prices tumbled as the dollar appreciated against the euro to its highest level in more than two years, sparking a heavy selloff amid concerns that the Federal Reserve will implement more aggressive rate hikes to beat inflation, a move that could significantly slow global economic growth.
The sharp drop in the euro was driven by forecasts that the European Central Bank will delay tightening monetary policy on concerns over a more severe recession because Europe is a big importer of energy and is now faces energy security risks.
Warut Rungkam, head of research at YLG Bullion and Futures, said gold prices will remain on a downtrend in the medium term.
He said when the US economy begins to grow, inflation will start to subside, driving the Fed to move forward with more dovish monetary policies and causing the dollar to weaken. The prices of gold are likely to rise again in the fourth quarter this year, said Mr Warut.
However, investors need to closely monitor the Fed's movements as economic conditions can rapidly change, affecting the central bank's decisions on monetary policies, he said.
Mr Warut recommends traders gradually sell gold to take profits when prices begin to rebound to $1,784-1,786 an ounce, then wait to buy when the price weakens again by looking at support at $1,752 an ounce. The next support level is $1737-1,722 an ounce, he said.
Mr Warut expects the support lines for domestic gold prices to stand at 29,400, 29,600 and 29,850 baht per one baht of gold, with the resistance lines at 30,450 and 30,750 baht per one baht of gold.
Globlex Securities gives the short-term resistance level for spot gold prices at $1,785 an ounce. If the price doesn't increase, investors should gradually sell and take profits, the brokerage suggests.
Pawan Nawawattanasub, chief executive of YLG Bullion International, said gold prices have been volatile during the first half and will continue to fluctuate in the second half.
She said it is uncertain whether the price can stand above the level of $1,786 per ounce. The price has a chance to rebound to $1,916 an ounce, the second quarter's high, although it faces many negative factors, especially the Fed's aggressive rate hikes, said Ms Pawan.