Gold rebound faces further volatility

Investors are advised to avoid rushing into gold trading for short-term speculation as prices are expected to remain highly volatile amid further downside risks, says the Gold Traders Association (GTA).

GTA president Jitti Tangsithpakdi said the main factor influencing gold prices is ongoing conflicts in the Middle East, which are affecting oil prices and fuelling global inflation risks.

Meanwhile, markets are pricing in the possibility of a Federal Reserve interest rate hike next month, which would weigh on non-yielding assets such as gold.

If the Fed raises rates next month, Mr Jitti expects gold prices to decline again, potentially testing this year's low of US$3,880 an ounce. Domestic gold prices could fall to 62,800-62,900 baht per baht-weight, from around 64,000 baht now, he said.

Gold prices surged nearly 3.4% on Wednesday, marking their sharpest single-day gain since Aug 19 as the US dollar weakened to its lowest level in more than a month following the Democrats' victory in the US midterm elections.

Bullion has gained more than $250 this week after hitting a one-year low of $3,869.85 an ounce last Friday. Despite the recent rebound, gold has fallen nearly 30% from its record high of around $5,600 an ounce in January this year.

"Money invested in gold should be spare cash, and the investment should be viewed as a long-term commitment," Mr Jitti said. "Short-term investors should exercise caution as prices are likely to remain highly volatile, with further declines still possible."

Despite the fluctuations, he said he expects gold to resume its upward trend next year, potentially setting a new domestic record of 80,000 baht per baht-weight. However, the outlook will depend on US interest rate movements and geopolitical developments, including the Russia-Ukraine conflict.

PRICE CONSOLIDATION

Pawan Nawawattanasub, chief executive of YLG Group, said international gold prices recently exceeded $4,100 an ounce, supported partly by improving market sentiment following the Democratic Party's victory in the US midterm elections.

The election result raised hopes of easing tensions between Washington and Tehran, while US President Donald Trump acknowledged the Republicans' defeat and signalled no immediate plans to escalate military action against Iran.

The prospect of Democrats limiting war-related spending could help ease tensions in the Middle East and reduce inflationary pressure. A sharp decline in crude oil prices tames inflation and concerns over further interest rate increases.

Lower US Treasury yields have provided additional support for gold by improving the relative appeal of the non-yielding asset.

YLG expects near-term support for international gold prices at $4,050-4,000 an ounce, with resistance at $4,160-4,200. Failure to break above this resistance range could prolong price consolidation and create another buying opportunity, while a decisive breakout could pave the way towards $4,380, noted the trader.

For domestic gold bars, support is expected at 64,000-64,750 baht per baht-weight, providing a potential range for gradual accumulation. Near-term resistance is at 65,900-66,400 baht, with a break above this range potentially opening the way to 69,200 baht, said YLG.

SHORT-TERM VOLATILITY

Inter Gold Goldtrade Co expects further short-term volatility as prices adjust following a recent sharp rebound.

Gold is supported by expectations of easing geopolitical tensions following the US midterm elections, falling oil prices and continued purchases by central banks.

Crude oil prices falling below $90 a barrel could ease cost-driven inflationary pressures, while global central banks purchased a net 70 tonnes of gold in the third quarter, according to the World Gold Council, providing longer-term support for the precious metal.

However, the rebound of more than $200 after gold briefly fell below $4,000 has pushed short-term technical indicators into overbought territory, increasing the risk of profit-taking.

A weekly close above $4,100 would strengthen the bullish reversal signal and potentially pave the way towards $4,150 and $4,200. InterGold advises short-term investors to wait for a price pullback rather than chase the recent rally.