Gold, shares up on expected stimulus measures
Local gold prices and shares closed higher today, as investors expect more stimulus measures and further weakening in US dollar.
Driven by the likelihood of another quantitative easing in the US which guarantees a weaker dollar, the local gold prices were adjusted four times today, with the accumulated increase of Bt150 per baht weight. Bullion price was raised three times, each by Bt50 per baht weight. At 2.57pm, it was sold at Bt24,700 against gold spot price of $1,633.50 and dollar/baht exchange rate of 31.46. It is hovering near the record set in November 2011, when the monthly average was as high as Bt25,480, according to Thai Gold Traders Association's data.
Following the Group of 7 industrialised nations’ pledge at a teleconference on Tuesday night to deal with the euro crisis, the Stock Exchange of Thailand index also moved above the 1,100 points psychological level. It gained 18.80 points or 1.71 per cent to close at 1,117.95 points, on turnover of Bt23.4 billion.
Still, foreign investors remained net-sellers in the Thai market today, with net-sell position of Bt2.3 billion.
G7 finance ministers and central bank governors agreed Tuesday to focus special attention on eurozone banking developments ahead of the G20 summit in Mexico, according to
US and Canadian officials.
The meeting of officials from the Group of 7 industrialised countries came amid speculation that Spain will need a bailout - the latest crisis to hit the eurozone.
The European Central Bank was to meet Wednesday, with renewed turmoil in the eurozone and faltering global economic growth likely to force the Frankfurt-based ECB into a possible rethink of its current strategy, which could mean a cut in interest rates.
On Tuesday, the United States urged Europe to strengthen its banking system.
A European Union spokesman dismissed suggestions that the G7 conference call was a sign of the bloc’s economic crisis getting worse. Amadeu Altafaj, spokesman for EU Economy Commissioner Olli Rehn, told reporters in Brussels that it was a "regular" exchange that was not "extraordinary."
In Washington, White House spokesman Jay Carney said the G7 officials had agreed to monitor financial developments closely ahead of the Mexico G20 summit on June 18 and 19.
The officials had discussed "the policy response under consideration, including the progress towards financial and fiscal union in Europe," Carney said. The Canadian Finance Ministry released a statement with similar wording, the Globe and Mail newspaper reported.
Carney said the United States faced large "headwinds" from the two-year-long eurozone crisis, since its economy is so intertwined with that of Europe. He urged Europe to maintain its sense of "urgency" about its financial crisis and said the US was taking steps
to "insulate the American economy" from challenges posed by Europe
"There is much work to be done in Europe," Carney said.
"We’re hoping to see accelerated European action over the next several weeks, including in the run-up to the (G20) meeting in Mexico," Carney said. "A movement to strengthen the European banking system will be of particular importance in this time period."
Speculation about Spain needing an international bailout has been plaguing the EU in recent weeks, as the country struggles to tackle problems in its banking sector.
"That there is concern about the situation in Europe, frankly I find that completely normal," Altafaj said. "We are the first to confront it. We are not sweeping anything under the carpet."
The G7 encompasses Britain, Canada, France, Germany, Italy, Japan and the United States. European officials such as Jean-Claude Juncker, the president of the Eurogroup panel of EU finance ministers, have also taken part in past meetings.
Altafaj said that the European Commission is "always involved in these exchanges" and that although Rehn was in Riga on Tuesday, "phones work everywhere." He declined, however, to confirm his participation.