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Gold price on course for further increases

Gold traders remain bullish about price trends even as they dipped recently, saying the likelihood that the US Federal Reserve is done with interest rate hikes and the prospects of an intensifying Middle East war support price strength.

Spot gold prices moved in a range of $1,978-$1,990 an ounce Friday morning, up $3.02 or 0.15%, while domestic gold bars were traded between 33,850 and 33,900 baht, according to Hua Seng Heng.

Factors affecting the gold price include a growing expectation that the Fed will stop hiking interest rates, thus weakening the dollar and US bond yields, after the central bank’s rate-setting committee last week kept the rate unchanged at a 22-year high of 5.25-5-50%.

Investors also monitored Hezbollah leaders’ announcement about their stance on the Israeli war late on Friday, the gold trader said.

Hua Seng Heng projects gold prices could reach $2,000 per ounce for a resistance level and $1,970 for support.

YLG Bullion and Futures expects gold prices to remain “sideways up” following recent profit-taking sales as investors heard Fed chair Jerome Powell’s statement that the interest rate hikes are nearing their end. Higher interest rates raise the opportunity cost of holding gold.

The next resistance level for gold prices is $1,991-$2003 per ounce, YLG said in a research note.

Another factor supporting gold prices rising is buying from central banks. According to a report from the World Gold Council (WGC) earlier this week, central banks around the world purchased gold at a rapid pace in the third quarter of this year, 8% higher than the five-year average.

Net purchases of gold by central banks were the strongest this past quarter, soaring to 337 tonnes.

Demand for the full year from central banks tallied 800 tonnes, WGC said, and it expects the trend to continue the remainder of the year.

“The uncertainty of the global situation, especially the war in the Middle East, is causing central banks to accumulate more gold,” said Shaokai Fan, head of Asia-Pacific (excluding China) at the WGC.

Future trends in gold prices will depend on the Fed’s policy, he said.

The state of the Middle East war is also critical to gold price movement, which pushed gold prices to exceed $2,000 an ounce on Oct 30, said Mr Fan.

Demand for gold in Thailand grew by 7% to 13 tonnes in the third quarter, up from 12 tonnes a year earlier.

Most of the demand was for gold bars and coins, which surged 10% to 10.5 tonnes from 9.6 tonnes year-on-year.

Demand for gold jewellery fell by 2% to 2.5 tonnes from 2.54 tonnes last year, partly attributed to price fluctuations.

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