Thailand Leads Asia in Gold Demand Despite Record Prices

In a surprising twist that has captivated financial markets, Thailand has emerged as the frontrunner in Asia's gold demand, defying the global trend of declining jewelry sales and investor caution amidst record-high prices. According to the World Gold Council's latest report, Thailand's gold market demonstrated remarkable resilience in the second quarter, as consumers and investors alike sought refuge in the precious metal.

While the global gold market grappled with a staggering 18% price surge, averaging an unprecedented $2,338 per ounce and peaking at $2,427, Thailand stood out. Bar and coin investment in the nation surged by 22% year-on-year to 7 tonnes, a clear signal that Thai investors are doubling down on gold as a safe haven amid ongoing economic uncertainties, particularly the weakening baht.

"Thailand bucked current trends in the second quarter, despite the record gold price environment. Consumers reacted to the mid-quarter price correction, seizing the opportunity to buy before prices resumed their upward trend," remarked Shaokai Fan, a spokesperson for the World Gold Council.

Jewelry demand in Thailand also saw an unexpected rise, increasing by 12% year-on-year to 2 tonnes, in stark contrast to the global downturn in jewelry sales, which fell by 19%. The report highlighted that Thailand’s demand was driven by savvy consumers who capitalized on mid-quarter price corrections, anticipating further price hikes.

This surge in Thailand’s gold demand contributed significantly to Southeast Asia's overall consumer gold demand, which grew by 20% year-on-year to 9 tonnes. Thailand’s contribution was pivotal in bolstering global gold demand, which saw a 4% increase to 1,258 tonnes between April and June.

Globally, the quarter was marked by record-high gold prices, driven by a 53% surge in over-the-counter (OTC) transactions, which ballooned to 329 tonnes. However, the high prices took a toll on other sectors, with gold ETFs experiencing a minor outflow of 7 tonnes and jewelry demand plunging by nearly a fifth.

Despite these challenges, central banks around the world continued to augment their gold reserves, adding 183 tonnes globally—a 6% year-on-year increase, albeit at a slower pace compared to the previous quarter.

"The gold price has been a headline-grabber, supported by central bank and OTC demand. However, jewelry demand has suffered due to high prices," said Louise Street, the Council’s senior markets analyst. "A US Federal Reserve rate cut and India’s import duty reduction could reinvigorate gold demand in the coming months."

As the global gold market navigates through these volatile waters, Thailand's unexpected leadership in gold demand signals a unique consumer confidence and investment strategy. The World Gold Council's report suggests that, despite the headwinds, the evolving market dynamics may continue to support and potentially elevate gold demand globally. Thailand's robust performance may well be a bellwether for a broader trend across Asia, where gold remains not just a symbol of wealth, but a bulwark against economic uncertainty.

Source: The Nation