Renewed hostility between the US and Iran could cause global gold prices to plunge to US$3,600-3,800 an ounce, or 60,000 baht per baht-weight for domestic gold bar, especially if oil prices rise to $90-100 a barrel and remain at that level for more than a month, according to Thailand's leading gold trader MTS Gold.Kritcharat Hirunyasiri, chairman of MTS Gold, said the metal faces downside risks for 1-2 months from oil-driven inflation and potential tightening by the US Federal Reserve.
"The biggest risk to gold prices is a sustained rise in oil prices," he said. "If crude oil climbs above $90-100 per barrel and remains elevated, inflation could accelerate again in the US, potentially prompting the Fed to keep interest rates higher for longer or even raise rates further."
Year-to-date, bullion has lost more than 6.8% to stand at $4,030 an ounce, though it has recovered from a low of $3,950 earlier in the year. The non-yielding precious metal, which is used as a hedge against inflation, reached an all-time high of $5,602.22 an ounce on Jan 28 this year.
The market anticipates the Fed could lift its policy rates at its September meeting.
"Once US rates are cut, gold prices will likely fall to $3,800 an ounce or even $3,600 as a bottom," noted Mr Kritcharat.
