Global factors pushing up Thai gold prices

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American moves to weaken the dollar and strong international demand are again pushing Thai gold to near-record levels.

The Gold Traders Association quoted a selling price of 19,700 baht for one baht-weight of gold Nov. 12. The buying price for the same 99.99 percent-purity gold was quoted at 19,602 baht.

Nittaya Patimasongkroh, owner of Trathong gold shop, says gold prices are at record highs. Nittaya Patimasongkroh, owner of Trathong gold shop, says gold prices are at record highs.

Gold bars and ornaments of lesser purity were also pushing the 20,000 baht mark. The buying prices for 96.5 percent bars were 19,200 baht and 18,920 baht for ornaments. Selling prices were 19,300 baht for bars.

The high prices set off another wave of gold selling by Pattaya residents looking to cash in profits.

Gold prices worldwide are on the increase, with global prices actually higher than in the domestic Thai market. Nittaya Patimasongkroh, owner of Trathong gold shop in South Pattaya, said four factors are pushing up rates.

The primary reason is the recent move by the U.S. Federal Reserve to inject $600 million into the economy through purchase of bonds. By essentially “printing money,” the Fed’s second round of “quantitative easing” has weakened the dollar and increased the threat of U.S. inflation.

The fear of economic instability in America, and the weakened buying power of the dollar, pushes investors to gold, she explained.

The weaker dollar also figures in the second factor, Nittaya said: a stronger baht. The baht is Asia’s best performer this year, moving up against all foreign currencies, not only the dollar.

China’s move to buy gold and not dollars to bolster its foreign reserves also is pushing up prices, Nittaya said.

Finally, she said, a recent speech by the head of the World Bank suggesting one way to revive the global economy and ease currency disputes would be to return to the gold standard has also inspired buying among speculators. That also is pushing up prices, she said.

With many Thais having sold off the gold they have and only the biggest investors able or willing to buy at such high prices, Nittaya believes this holiday season will be a slow one for gold shops.

“I think we will see a New Year’s season like last year, with many people not buying gold and opting for other gifts instead,” she said.