Local gold traders remain bullish about bullion's price trend, saying prices could top US$2,500 an ounce by end-2024 with a significant price increase expected after the US Federal Reserve (Fed) cuts US interest rates in September.
Gold was quoted at $2,395 an ounce by midday in Asian trade on Tuesday after it was announced that President Joe Biden had dropped out of the US presidential race and that he backed vice-president Kamala Harris as the new Democratic candidate, sending the price up to top $2,400 overnight, according to gold trader Hua Seng Heng.
Prices were also pressured by a stronger US dollar and a slight downward trend is likely to continue in the short term, it added.
Gold prices scaled an all-time high of $2,483.60 last week, with markets broadly pricing in a 25-basis-point US rate cut by September. Lower interest rates increase the appeal of gold.
Domestically, gold was traded at 41,050 baht per one-baht weight after the price fell 200 baht by midday, as the Thai currency slightly changed from Friday's close, quoted at around 36.3 baht to the dollar.
Despite the recent fall in price, Jitti Tangsithpakdi, president of the Gold Traders Association, believes the highly anticipated Fed rate cut in September would push global gold prices to surpass $2,500 by the end of the year.
The price estimate is based on a forecast of a single Fed rate cut this year, noted Mr Jitti.
"We also have to monitor the US presidential election later in the year, which could lead to a change in economic policies and interest rates," he told the Bangkok Post.
The US presidential election could affect the situation surrounding the Russia-Ukraine war, which would impact the prices of safe-heaven assets including gold, Mr Jitti added.
Republican candidate Donald Trump has pledged to cut corporate taxes and interest rates. Lower tax revenues could widen the US federal government's budget deficit.
Many investors believe the deficit will keep deteriorating under a second Democratic administration too.
"Structurally bullish drivers for gold, like growing concerns over complacency regarding the rise in fiscal debt, tariffs and trade retaliations as well as broad America First rhetoric, are likely to remain intact," JP Morgan said in a note.
With the strong structural bull case for gold remaining intact, JP Morgan Research recently upgraded its gold price targets for this year and 2025.
The world's leader in investment banking predicts gold prices to climb to $2,500 an ounce in the fourth quarter of 2024 and $2,600 in 2025. This prediction assumes a Fed cutting cycle commencing in November, pushing gold prices to new nominal highs.
