In a surprising development that captivated financial markets, Thailand has emerged as a bellwether for Asian gold demand, bucking global trends of falling jewelry sales and investor caution amid record high prices. Thailand's gold market showed surprising resilience in the second quarter as consumers and investors alike sought refuge in the precious metal, according to a new report from the World Gold Council.
As the global gold market experienced a staggering 18% price surge, with the average price reaching an unprecedented $2,338 per ounce and a peak of $2,427, Thailand stood out. Investment in gold bars and coins in the country surged 22% year-on-year to 7 tonnes, a clear indication that Thai investors are doubling down on gold as a safe haven, especially with the baht continuing to weaken.
“Thailand bucked the current trend in the second quarter despite a record gold price environment, as consumers reacted to a mid-quarter price correction and seized the opportunity to buy before prices resumed their upward trend,” said Xiaokai Phan, spokesman for the World Gold Council.
Thai jewellery demand also unexpectedly increased, rising 12% year-on-year to 2 tonnes. This contrasts with the global downturn, which saw jewellery sales fall 19%. The report highlighted that Thai demand was driven by astute shoppers who took advantage of the mid-quarter price correction and anticipated further price increases.
The surge in gold demand from Thailand was a major contributor to consumer gold demand across Southeast Asia, which increased 20% year-on-year to 9 tonnes. Thailand was a huge contributor to global gold demand, which rose 4% to 1,258 tonnes in the April-June period.
Globally, gold prices hit a record high this quarter as over-the-counter (OTC) trading rose 53% to 329 tonnes, but high prices also hit other sectors, with gold ETFs experiencing modest outflows of 7 tonnes and jewellery demand falling by almost a fifth.
Despite these challenges, central banks around the world continued to add to their gold reserves, increasing globally by 183 tonnes, a slower pace than the previous quarter but still a 6% increase over the previous year.
“Gold prices have been gaining traction, supported by demand from central banks and the over-the-counter market, but high prices have dampened demand for jewellery,” said Louise Street, senior market analyst at the association. “Interest rate cuts from the US Federal Reserve and a reduction in import tariffs in India could help reignite demand for gold in the coming months.”
Thailand's unexpected lead in gold demand amid volatility in the global gold market speaks to consumer confidence and unique investment strategies. The World Gold Council report suggests that evolving market trends will continue to support and potentially boost global gold demand, despite headwinds. Thailand's strong performance could be a harbinger of a broader trend across Asia, where gold is not only a symbol of wealth but also a bulwark against economic uncertainty.
Source: The Nation
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