Transcription
Deep support levels in a theoretical technical sense are located around $3,600 per Troy ounce.
Currently, those who have experienced the situation from over 10 years ago, around 2012-2013, when prices went high and then dropped sharply, and it lasted for a long time in a low phase, will it return to what happened in the past?
Generally, most views remain around plus or minus $5,000, $4,800, $4,900, $5,000, $4,000, etc. These views differ greatly now because of the war situation.
As you mentioned, SPDR has been selling, and what has been selling non-stop is ETF. However, ETF also comes partly from retail investors. On the other hand, China recently reported that in May, they bought the most in over 2 years. And from the beginning of the year until the first 5 months, they bought up to 76%. Compared to the same period last year, can you explain that there is actually buying pressure from China acting as a support?
Yes, I have analyzed this many times. Central bank buying is long-term investment. They use the dips as buying opportunities. This is different from Thai investors, who like to chase prices and end up holding at highs. Long-term investors buy when gold falls, and as you know, it has been falling for 4-5 months. This is a suitable time to buy for long-term investment, using cold cash.
Therefore, we will certainly see figures from central banks starting to emerge, showing they are gradually buying. China has been buying continuously. And they bought more, compared to when prices were rising. China has been buying gradually since gold started its downtrend from $4,800, $4,700, $4,600. This is the principle of DCA buying. So, central bank buying is long-term investment. Compared to the trading volume in the market, it's only 1 in 100 or 1 in 300. This is because the trading volume per day is about 500-600 tons during peak times, 500-600 tons per day.
During this period, it might decrease to 300-400 tons per day. Therefore, central bank buying of about 100 tons, 200 tons per month is relatively small, less than 3-400 times. However, it shows the principle that long-term investors are accumulating. Short and medium-term investors are mostly speculators or seeking returns from gold, investing for 1-3 months, 5 months, etc. These short, medium, and long-term investors look for opportunities to profit, whether in a downtrend or an uptrend. A downtrend like this can also be profitable by trading through the TFEX or Thai futures market.
This means you might sell first and then buy later, sell first and then buy later. This must be done in the TFEX or Go Futures market, which can be traded in the derivatives market. However, for those who trade physical gold bars, they cannot short. In investor language, this is called "short against port." This means if you have gold, say 100 baht weight of gold, and you analyze that it's a long downtrend, you might sell a portion of what you have, say 50 baht or 30 baht, and hope that it will fall, making it an opportunity to buy.
This is profiting from a downtrend without increasing your portfolio. However, there is always a risk of being wrong. If you sell today, and gold has already fallen about 2,000 baht in a week, selling here might mean selling at the low, and it might rebound. This is a risk to be aware of. Therefore, in this situation, there are both crises and opportunities. Whether you seize the opportunity or not is a risk that requires study. If we understand and are confident, we might sell a portion, say 10 baht, 20%, 30%, and then buy back in stages, depending on the strategy.
These strategies are necessary to study further. MTS Mae Thong Suk has a team for teaching, approved by the SEC. Please, Khun Naow.
Yes, Doctor. I would like to ask, after it broke below 4,000, what are the next support levels we will see? Because when news about gold comes out, people comment, "Can I buy yet? Can I buy yet? Let's wait until it reaches 3,500. Let's wait until it reaches 3,000." Everyone is like, "There is still buying pressure, but I want to buy lower." Doctor, what are the important support levels?
Currently, investors are buying a lot, more than selling during the dips. And the volume is increasing significantly. As for the buying points, we must look at the chart and set a strategy. Because it's like when it was going up, we didn't know where the resistance was because it broke through all resistance levels. Now that it's falling, it's hard to find support levels because it has broken through all support levels. Therefore, it is a technical downtrend. However, charts have daily, short-term, medium-term, and long-term aspects. Currently, after falling deeply, about 30% from the beginning of the year. Therefore, in this period, if you understand the theory, look at the weekly chart. We can do Fibonacci retracement. Is it on the weekly chart? Oh, I didn't draw it today. So, in Fibonacci retracement, it has fallen to around 55%. The actual support according to Fibonacci would be 31, 61, and 50, something like that. Therefore, deep support levels in a theoretical technical sense are located around $3,600 per Troy ounce.
However, I'm not sure if it will reach that point or not. But this is about support levels. If we draw Fibonacci from the weekly chart, it's currently testing the low around the 61% level. Therefore, I believe that around $3,600, theoretically, should hold. But in terms of investment, if we don't understand this or don't know much about strategy, it has fallen deeply and broken below the 200-day moving average. This is a time for long-term investors to buy. And as I mentioned, out of 100 parts, divide into 10 parts and buy gradually, every time it drops about $50. Currently, it should be all buyable, whether it's $50, $30, or $20 per Troy ounce, you should buy gradually, depending on your strategy. Compared to Thai gold, 63,000 baht is now a good buy, but for long-term. So, every further drop of about 400-500 baht per baht of gold, you buy in stages, like 62,500, 62,000, 61,500, 61,000 exactly. At every point of 300-500 baht, you gradually buy because we don't know where it will stop. This method is for ordinary people who don't have much knowledge, similar to DCA. However, this method is not suitable for speculators. So, for speculators in Gold Futures, you must study the charts and have an investment strategy for both uptrends and downtrends. Currently, it's a downtrend. You might sell first, buy later, buy first, sell later, depending on the fluctuations. Gold futures trading has also increased recently because it has fallen deeply.
Yes, Doctor. I would like to ask, because those who have experienced the situation from over 10 years ago, around 2012-2013, when prices went high and then dropped sharply, and it lasted for a long time in a low phase, will it return to what happened in the past?
I don't think so. The main reason is that gold, since 2022 when Russia invaded Ukraine, has fully become a safe-haven asset. Before that, it was sometimes a safe haven, sometimes not, in terms of jewelry. But now, it's quite a lot for investment and is against the US dollar.
The overall picture of the dollar is that due to expectations of interest rate hikes, the dollar is strengthening, even breaking previous highs. Look at this chart.
See how the dollar index on the left has broken the double top at 106. Currently, it has strengthened due to expectations of interest rate hikes. The baht has thus broken 33, rising to around 33.40 baht in the last 4 days, fluctuating around 33.40 baht. Simply put, the long-term outlook for the dollar, I still believe it will return to a downtrend or stabilize around 98-99. Why? Because this rise is driven by the expectation of interest rate hikes, not by the overall strong US economy. Therefore, it won't rise for long. Why? Because unemployment figures are still high. So, overall, US trade and economy, which will announce GDP tonight, are still expected to decline to around 1.5-1.6%. Therefore, overall, the strong dollar is unlikely to last long, meaning it's temporary and will fall back. So, if it falls back and we believe in this analysis, it can be concluded that gold will not fall for much longer, perhaps 2-3 months. As I mentioned, it will enter a phase of equilibrium and gradually return to an uptrend. You might ask, why not wait another 2-3 years for it to rise? The US economy is not good.
Long-term interest rate hikes are impossible. These rate hikes are to combat inflation. And as we analyzed, if you believe inflation is coming, it will eventually go away because oil prices are falling sharply. Oil prices are not falling by 5% or 3% per step. They have fallen by 30% from two weeks ago. They have plummeted from $100 per barrel to $72 per barrel. As I mentioned, even if it just stops here and doesn't fall further, the overall inflation picture will also decline. But it will take another 2 months. It won't fall immediately, but it might be about 2 months to clear old stocks. This oil situation will return to normal within 1-2 months because oil is falling very rapidly.
Therefore, with this analysis, we see that when the Fed changes its stance and decides not to raise interest rates, gold will start to rise and enter an uptrend. So, the overall picture for the end of the year, gold still has the opportunity to return to an uptrend in the early phase. This means it might return to around $4,700 - $5,000. It can rise by about 700-800 dollars from here, which will take time. But we must admit that currently, the outlook for gold analysis or target adjustments has been lowered. Look at the picture provided to the team in the later slides to see that many organizations or large banks have started to lower their outlook. Major Bank Gold Outlook has been revised down from what many expected at $5,500 - $6,000, now lowered to around $5,000. Some see it at $4,900. Some, like Citibank, see it as low as $4,000. This depends on how one analyzes interest rates. But look at another page that the Doctor is talking about. This is clearer. Generally, the outlook remains around plus or minus $5,000. $4,800, $4,900, $5,000, $4,000, etc. These views differ greatly now because of the war situation.
As I mentioned, in a war situation, it depends on where you analyze and what point you focus on. If you analyze the current timing, you will have an advantage over those who analyzed just last week. Before, things were unclear. Oil hadn't fallen yet; it was still at 89-90, and it was uncertain whether it would fall or not. But today, news has come out that the Strait of Hormuz might open, and open without any tariffs. This means the overall picture of the Strait of Hormuz will return to normal under the ongoing negotiations. This is what the overall market expects. As I mentioned, the market attaches importance to the opening of Hormuz because the opening of Hormuz means oil will fall into normal levels, below $70 per barrel. Therefore, if it falls below that level, inflation and investment will all return to normal.
Yes, Doctor. Another point is about the Thai baht. Because the baht has depreciated significantly recently, from around 31 baht per US dollar at the beginning of the year to 33.40 baht per US dollar now. This affects the price of gold. So, regarding Thai gold, Doctor, what are the support and resistance levels you foresee?
For Thai gold, the actual support level is around 63,000 baht in the short term. It is currently testing this level. If the support level goes deeper, it might be around 60,000 baht exactly. This means if it falls deeper, to around $3,600-$3,700 per Troy ounce, it will fall another $300. This is possible. But as I analyzed, we still believe that such a deep fall would require actual interest rate hikes. Currently, it's just rumors. And it has already reacted to the news, falling by $350 in 7 days. This news came out on June 18th. Today is June 25th, and in just 7 days, it has fallen over $300. There hasn't been any actual increase yet. And the dollar has strengthened, so the baht has weakened. With the baht weakening, we see that the Thai economy is not good. Everyone knows that our GDP has not grown much for 3 years. Therefore, analysts and businessmen generally want the baht to weaken; the weaker it is, the easier it is to sell goods. This is about trade. But in terms of rebalancing, we believe that overall, it must follow the situation of the US dollar and the overall US economy compared to Thailand. Therefore, overall, at 33.40, trade will improve significantly.
Yes.
Now, if we compare it to gold, please.
Okay.
I was about to ask the Doctor, because many people ask if we will see 50,000 baht, is there a chance? I still believe we won't see it. We won't see it. The chance of seeing it, I think, is not more than 5%. Not more than that.
Right.
What does that mean? We have to think logically. Our logic is that it rose from 3,600. And from 3,600, if we look at the medium-term chart, it rose from 3,600. If it's truly long-term, it must have risen from around 2,000. We need to look at the chart and the Fibonacci Retracement. Which is the part at the bottom that is marked in blue. I believe that point is around 3,000. Is it 3,600 - 3,700? My screen is small, but I believe it's around there, and it should hold. This means that from here, a drop of $300 per Troy ounce, gold could fall by another approximately 4,000 baht per baht of gold.
Yes. 4,000 baht would be around 58,000-59,000. It's unlikely to go much lower. There is a chance, but very small.
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