Thailand's gold demand remains robust thanks to investor buying during times of economic and political uncertainty, while inflation and risks posed by Donald Trump's America-first agenda could drive demand for bullion further in 2025, says the World Gold Council (WGC).
In contrast to a 9% global decline, Thailand's consumer bar and coin demand increased 15% year-on-year in the third quarter of 2024, with the country the largest buyer of bars and coins in Southeast Asia, said Shaokai Fan, head of Asia-Pacific (ex-China) and global head of central banks at the WGC.
Consumer gold demand recorded remarkable resilience across 2024, becoming the asset of choice for Thai investors during economic and political uncertainty in the country, he said.
"Thai investors view gold both as a means of value protection and for long-term returns, as bar and coin investment in Thailand remains particularly robust," said Mr Fan.
Globally gold performed well last year, with prices rising by 25.5% and outperforming all major asset classes, likely due to its role as an effective hedge against heightened geopolitical uncertainty and market volatility, noted the WGC.
Over the course of 2024, the LBMA Gold Price PM set 40 new record highs, the most recent of which was US$2,777.80 an ounce on Oct 30.
Central bank and investor purchases more than offset a notable deceleration in consumer demand, while lower yields and a weakening US dollar in the third quarter fuelled Western investment flows, said Mr Fan.
In 2025, the market consensus suggests a rangebound performance for gold as the US Federal Reserve is likely to cut the policy rate by 100 basis points for the year, with inflation softening but remaining above the target. European central banks will likely cut rates by a similar amount, noted the WGC.
The council believes Fed movements and US dollar volatility will continue to drive gold prices.
A more business-friendly fiscal policy combined with President Trump's America-first agenda is likely to improve sentiment among domestic investors and consumers, according to the WGC, favouring risk-on trades in the first few months of the year. However, whether these policies will also result in inflationary pressures and disruptions to supply chains remains in question, said Mr Fan.
"Trump's second term may provide a boost to the Thai economy, but has elicited a fair degree of nervousness for investors around the world. The WGC believes if the global economy performs according to consensus in 2025, gold may trade in a similar range as the end of last year, with the potential for some upside," he said.
Concerns about European sovereign debt are again mounting, along with continued geopolitical instability, which the WGC believes could prompt investors to look for hedges such as gold to counter risk.
