Increasing tensions in the Middle East could push gold above US$2,000 an ounce, while domestic prices could reach 34,700 baht per baht-weight (15.2 grammes) after two spikes on Thursday, say local gold traders.
Spot gold rose 0.4% to $1,986.79 on Thursday morning, while US gold futures edged up 0.1% to $1,997.10 as growing concerns about the Israel-Hamas conflict increased investors’ appetite for safe-haven assets.
Domestic gold prices increased twice by 400 baht yesterday to 34,150 baht for gold bars, in part because of the stronger dollar.
“The Israeli leader’s vow to launch a ground invasion to push Palestinians out of the Gaza Strip has raised investors’ concerns that their conflict could turn into the Third World War,” said Varut Rungkhum, head of research at YLG Bullion & Futures.
Meanwhile, the main UN agency in Gaza halted aid operations and reportedly partially pulled out its team on the ground, signalling the war might escalate, he said.
“We project global gold prices to reach $2,003 per ounce while domestic prices could be in the range of 34,400 to 34,700 baht,” said Mr Varut.
Other analysts expect gold prices could eventually reach $2,100 during the current tensions. Mr Varut noted how they last climbed above $2,000 in Match 2022, not long after the Russian invasion of Ukraine.
Gold reached an all-time high of $2,074.88 in August 2020.
In the near term, gold prices could be influenced by the outlook for continuing high interest rates in the United States. That outlook in turn could be influenced by US third-quarter gross domestic product (GDP) data due this week.
As US bond yields edged up again overnight, analysts are now predicting the Federal Reserve might increase its benchmark rate one more time this year, said Mr Varut.
The local gold trader Hua Seng Heng said gold prices were trending sideways up with a key resistance level at $2,000 per ounce and support at $1,950 to $1,960.
Besides the Middle East conflict, growing gold demand in China has pushed up prices. Gold demand on the mainland rose 7.3% year-on-year in the first nine months of 2023.
MTS Gold also expects gold prices to rise, with $2,000 the major resistance and support at $1,965.
Domestically, it sees support at at 33,900 baht and resistance at 34,300 baht.