Traders expect gold prices to remain high over the next 3-5 years because of ongoing global economic uncertainty and geopolitical conflicts.
They recommend investors allocate 5-15% of their portfolio to gold to diversify investment risk and hold the precious metal as a safe-haven asset.
Tipa Nawawattanasub, chief executive of YLG Bullion and Futures, said the upward trend in gold prices, which began in 2019 when Covid-19 broke out, is expected to continue for another 3-5 years supported by various global concerns.
The domestic gold price has risen by about 20% this year, compared with a 14-15% increase in gold prices worldwide.
The uptick in Thailand was supported by a 6-7% depreciation of the baht since the start of the year.
However, short-term profit-taking by investors is one factor causing a temporary dip in gold prices, she said, yet the long-term trend remains upward.
"We recommend investing in gold to diversify portfolio risk, with an allocation of 5-15%," said Ms Tipa.
"This could help improve returns or reduce volatility."
In the short term, gold prices may dip based on profit-taking, with the first support level at $2,277 an ounce and 39,500 baht per one-baht weight domestically, she said.
The next support level is $2,228 an ounce or 38,700 baht per one-baht weight.
According to the Gold Traders Association, as of June 19, 2024 at 9.08am, domestic gold prices increased by 150 baht, with the price of a bar 40,450 baht per one-baht weight and the price of jewellery gold 40,950 baht.
The gold price in the international market was $2,342 an ounce, down by $4 or 0.18%.
When it comes to the long-term trend, the price of gold in the international market is expected to face resistance at $2,500 an ounce this quarter, with a fresh high of $2,450 per ounce already reached this year, said Ms Tipa.
"We believe each time the gold price reaches a new high, there will be short-term profit-taking, followed by a market retest," she said.
"The next resistance level is projected at $2,650 an ounce or 46,000 baht per baht weight domestically in 2024."
Key factors supporting continued gold purchases include central banks worldwide selling other assets, including the US dollar, to increase their gold holdings. The high level of US public debt must also be monitored, according to YLG Bullion.
Historically, when money is injected into the economy, the US dollar tends to weaken, which in turn drives gold prices higher.
According to Ms Tipa, the upcoming US election in November may also impact gold prices, especially if Donald Trump wins and becomes the US president again, potentially causing significant volatility in global markets and gold prices.
While anticipated interest rate cuts by the US Federal Reserve have been revised from three to only one this year, she said this revision has largely been absorbed by the market.
If the US economic results are poor, gold prices are likely to increase, said Ms Tipa. Conversely, an interest rate hike could cause gold prices to fall as bonds would offer better returns.
However, an interest rate cut is more likely, which would be a positive factor for gold prices, she said.
Research from Hua Seng Heng indicated lower than expected US retail sales in May led to a decline in US bond yields, potentially prompting the Fed to consider a rate cut.
SPDR, the world's largest gold fund, has maintained its gold holdings.
With the US financial markets closed for Juneteenth, gold prices are expected to remain relatively stable.