Gold prices face turbulence as oil, Fed risks increase

Gold prices are facing near-term turbulence, according to Thailand's leading gold trader MTS Gold, with the chairman Kritcharat Hirunyasiri warning of downside risks over the next one to two months driven by oil prices and US Federal Reserve policy.

Mr Kritcharat stated that if crude oil climbs above $90 to $100 per barrel and remains at that level for more than a month, it could reignite inflation in the United States and prompt the Fed to keep interest rates higher for longer or raise them further. In that scenario, global gold prices could fall to between $3,600 and $3,800 per ounce, or around 60,000 baht per baht-weight for domestic gold bar. This risk is also tied to renewed hostility between the US and Iran.

Year to date, gold has lost more than 6.8 percent, currently sitting at around $4,030 per ounce, having recovered from a low of $3,950 earlier in the year. The metal reached an all-time high of $5,602.22 per ounce on January 28 this year. The market currently anticipates the Fed could raise its policy rate at its September meeting.

Despite these near-term pressures, the medium and long-term outlook remains positive. Analysts forecast gold to finish the year in a range of $4,500 to $5,000 per ounce, though these projections were downgraded from earlier estimates exceeding $5,000. Over the longer term, if gold holds around the $4,000 level in the coming months, analysts believe prices could eventually rise to between $6,000 and $8,000 per ounce, supported by ongoing central bank purchases and the broader de-dollarisation trend.

On the business side, MTS Gold is launching what it describes as Thailand's first investment digital token offering exposure to the gold bullion trading business. The token carries a three-year investment term with a fixed return of 3 percent per year, plus the potential for additional returns linked to gold price appreciation at the end of the project. Tokens are priced at 1,000 baht per unit with a minimum subscription of 10 units, and the total offering size is up to 2 billion baht. Proceeds will be used to expand MTS's operations from 13 outlets to between 20 and 25.

For expats, investors and business owners in Thailand, shifts in gold pricing and inflation expectations are worth monitoring closely as part of any broader financial or asset planning strategy.