Gold fell to its lowest price in three years after US Federal Reserve chairman Ben Bernanke said stimulus measures might be reduced this year as the US economy recovers. Market expectations are for the price to fall below US$1,300 (S$1,663) an ounce this month, while the local gold price declined slightly, eased by appreciation of the baht.
Gold for immediate delivery dropped as much as 3.4 per cent to $1,304.75 an ounce yesterday. Bullion for August delivery sank 5.1 per cent to $1,303.30 an ounce on the Commodity Exchange in New York.
In London, gold fell to the lowest in more than two and a half years, exceeding the drop in April.
Gold has slumped by 22 per cent so far this year amid speculation the Fed will pare its quantitative easing (QE), which helped the metal cap a 12-year bull run last year. Bernanke said the US central bank, which currently buys $85 billion of Treasury and mortgage debt each month, might begin reducing purchases this year and end the programme in 2014 should the economy continue to improve.
Thailand's Gold Traders Association adjusted its local gold price 10 times yesterday, with gold bar selling at Bt19,150 per baht weight.
Kritcharat Hirunyasiri, president of MTS Gold (Mae Thong Suk Group), said the global price was highly volatile on concerns over the likely tapering off of US monetary stimulus. The price is expected to continue its decline, he said.
"The gold price will likely decline consistently and is expected to go down below $1,300 an ounce soon. The local price has been highly volatile, however, softened by the weakening baht," he said.
A Bt1 depreciation of the Thai currency against the dollar affects the local gold price by about Bt1,600 per baht weight, he added.