Gold traders, TFEX to meet on trading hub

Economy March 13, 2014 00:00

By The Nation

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The Gold Traders Association, which will today discuss with the Thailand Futures Exchange (TFEX) the possible establishment of a gold-trading centre, expects the price of the precious metal to touch US$1,400 (Bt45,380) per ounce in the short term - due la

Chairman Jitti Tangsithpakdi yesterday said his association would propose that TFEX set up a Thai gold-trade centre.

"The association would manage it, and the state agency could con?trol it," he said.

In response to TFEX’s offer concerning investors receiving gold when their futures contracts end, the association does not consider that to be worthwhile, he added.

Jitti said the price of gold was expected to rise to $1,400 an ounce in the short term, due mainly to the ongoing tension between Ukraine and Russia, and also the global economic recovery.

Thanks to rising gold demand across the world, and particularly from China and India where taxes on gold trading have been abol?ished, gold markets have become bullish.

"I believe the gold price will not fall below $1,050 an ounce this year. Investors should trade gold in the short term only, as risks remain," Jitti said.

Kamolthan Paisalvichit, director of the Gold Research Centre, said that this month’s confidence index for gold had risen by 0.18 of a point, or 0.3 per cent, to 53.73 points.

The index is above 50 for the third consecutive month, reflecting the possibility of gold prices increasing in the short term. The three-month confidence index jumped 15.11 points, or 33.48 per cent, to 59.72.

"Based on a survey, most gold traders expect the gold price to stay in a range of $1,280-$1,400 an ounce," he said.

The baht’s movement, a possible change in the Bank of Thailand’s monetary-policy stance following the Thai economic |slowdown since the fourth quarter of last year, tapering of the US monetary-stimulus programme, and the Ukrainian conflict are expected to affect gold prices this month, according to the centre’s survey.

In the short term, gold prices are expected to stay on an upward trend and may rise to test $1,450 an ounce. However, there remain risks due to the US stimulus tapering in the long term, said Kamolthan.

If the Federal Reserve decided to end its quantitative easing this year, that would affect gold prices, he added.

Although Thailand’s Monetary Policy Committee decided yesterday to trim the policy interest rate, the move is not expected to affect the exchange rate as it takes some time for such a cut to impact on the economy, said the research centre chief.