Transcription
Hello, and welcome to the program "Talk About News to Understand Every Investment." This is a program that will bring up important and hot news, stories about finance each day, to analyze and delve into with experts in various fields, so that everyone's investments can grow together. If we talk about assets that have always been popular with Thai investors, including investors worldwide, I believe many people will think of gold. Because during times when the global economy is full of uncertainty, whether it's inflation, interest rates, or even geopolitical conflicts, gold is often seen as a safe-haven asset that helps preserve the value of investment money. But what happened in June was a picture that many might not have expected. Because even though the world still has tensions from the situation in the Middle East, the price of gold did not rise as many parties expected. On the contrary, the global gold price faced continuous selling pressure, while the price of Thai gold also decreased by more than 5,000 baht within a single month, causing concern for quite a few investors. The important question is, what happened to gold? Why couldn't the news of war push up the price of gold as it used to? It seems that today the market is giving more weight to other factors, whether it's the direction of interest rates from the US Federal Reserve, the flow of the US dollar, or even the flow of investment money into AI and technology stocks, which are currently creating outstanding returns. At the same time, another factor that investors worldwide are watching is the Fed meeting at the end of July. This could be a key variable that will determine the direction of gold prices in the second half of the year. Today, what we will discuss is the picture of appropriate recommendations for investors. If you are an investor who is currently holding gold or waiting for an opportunity to buy, how should you strategize during a time when the market is still full of volatility like this? Today, we will discuss all of this with Khun Siripokotiprapha, Director of Analysis at Hua Seng Heng Gold Futures Company Limited. Khun Ket, hello. >> Hello, Nong Nami. Hello to all viewers. >> Yes, Khun Ket. I have to ask you first. Regarding the gold price in June, now that we are at the end of the month, it doesn't seem to be a price that investors are very satisfied with. So, I would like Khun Ket to update us on the overall picture of the gold market recently. Because it was a month where prices adjusted quite strongly, both global and Thai gold prices. What happened to the market this time? >> Ah, global gold saw a drop below $4,000. Thai gold followed, but the baht helped a bit. The key issue is likely to be inflation figures, whether it's CPI or PPI, which were announced mid-month and showed an acceleration. For example, May PPI was 6.2%, and CPI reached 4.2%. These figures are the highest in over 3 years, since the Russia-Ukraine war. What the market truly feared and worried about was that after the Iran-Israel war, Iran used the Strait of Hormuz as a weapon of war, causing trouble for the whole world, oil prices rising, inflation soaring. This is the mode where investors worry about inflation and fear the Fed raising interest rates. The Fed meeting in mid-June was likely the main issue that caused gold to fall sharply and deeply. I think Powell has become a hawk who won't back down. He still says he wants to bring inflation down to the 2% target, because inflation has been above target for 5 consecutive years and he still can't control it. So, the second issue is the dot plot figures, which indicate interest rate hikes this year. It is expected that interest rates will be raised this year. Even if rates are cut next year or the year after, the market is not looking that far ahead. The market is in a mode of fear of interest rate hikes. Most of the committee members are hawkish and agree that interest rates must be raised. So, Khun Ket believes the market is primarily concerned about this, which is why gold has fallen. >> Yes, that means that many people, Khun Ket, are still wondering why there is still tension between the US and Iran, but gold did not adjust as in the past, when war would cause gold prices to rise. Does this mean that the war factor does not have as much influence on gold prices as before? >> Yes, if we compare it to 1979, the year that caused oil prices to triple. At that time, gold also tripled. From over $200 at that time, gold went up to over $800, an increase of more than 3 times, in line with oil prices. So, I think the context of the gold market has changed considerably. There might be concerns about interest rates from the US. We heard that last year, gold gave a return of 64%, the highest in 46 years, which is the highest since 1979. That year, gold rose by over 100%. So, I would say that the market's perspective might have changed. Gold only rose for one day, the day the war broke out. After that, it kept falling. And the sharp rise in oil prices led to the market, as Khun Ket said, worrying about the Fed raising interest rates. Because before that, the Fed had a relaxed monetary policy. Interest rates had been on a downward trend for 2 years. Last year, the Fed cut interest rates 3 times. So, monetary policy changed direction. It changed from "maybe we'll cut interest rates" to "after the war, for about a month, we might not raise or cut interest rates, keep rates at the current level, higher for longer." It turned out that they might raise interest rates. The war dragged on, and last week, I think it was a trigger that made us wonder if the Fed might have to accelerate interest rate hikes. Kevin Watch said so. Plus, Bank of America said the Fed might have to accelerate interest rate hikes to curb inflation, possibly raising rates 3 times in September, October, and December. It's the opposite. Last year, during the remaining 3 meetings, they cut interest rates. Now, during the remaining 3 meetings this year, they will raise interest rates. Deutsche Bank said they will raise rates twice. So, the market went from one hike to possibly two. But after the Fed meeting, the market changed its view that the Fed might raise interest rates faster, from December to possibly September. So, I have to say that it might have made investors feel that it was quite different from what they expected, mainly due to this issue. >> Yes, if so, right now, today, what is most important to gold is the factor of monetary policy or the Fed's interest rates. Khun Ket, what specific issues should investors pay special attention to during the Fed meeting in July, at the end of next month? >> The next meeting, I think, won't be as exciting as the previous one. There won't be any economic projections released. We might just listen to Kevin Watch. Kevin Watch will speak on Wednesday. So, I think it won't cause gold to fall as sharply as the meeting this month. You can observe that gold rose on Friday because investors felt a bit more relieved that the target inflation figure, PCE, came out as expected, at 3.4% and 4%. But the inflation target is 2%. So, I think the market might be somewhat relieved. But I don't think it will have much negative impact. And what's important is the annual Fed meeting in Jackson Hole at the end of August. That will be important because the Fed Chairman will use this platform to announce policy changes or any variables that have changed. Kevin Watch, in his style, wants to reform the Fed. He's the only one who doesn't send out dot plots, doesn't want to give forward guidance, and has cut it out. So, I think we should listen to Kevin at Jackson Hole. It should have a considerable impact on gold from that meeting. Because we've observed that many officials have used this platform to announce to the world. The annual Fed meeting is a gathering of leading central bank governors and academics. They would likely want to use this platform to announce any significant policy changes. Hopefully, QT won't be announced at Jackson Hole, but it will be done gradually. They've been reducing their balance sheet for 2-3 years. So, it might not have a very severe negative impact, but we still need to be cautious about Kevin Watch. We can't quite figure him out. Some people are even surprised that he's such a hawk. >> Yes, besides the issues of war and monetary policy, Khun Ket, many people have heard the term "US dollar" and "bond yields" all the time recently, but still don't understand how both of these affect gold prices. Could you please explain it in a simple way for general investors? >> Normally, the relationship between the US dollar and gold is inverse. When the dollar strengthens, people tend to think, "If the dollar strengthens, I can hold the dollar and get returns. If the dollar strengthens by 1%, I get that return." But for gold, people think, "It doesn't offer interest, no dividends." These are classic phrases. So, it becomes a comparison because they are both safe-haven assets. One is paper money, the other is a tangible asset, gold. So, they are compared. Simply put. As for bond yields, the increase reflects expectations of rising inflation and rising interest rates. The 2-year bond is a proxy for the market's view on the Fed's policy rate. It reflects clearly. As for the 10-year and 30-year bonds, in the past month, or early June, the figures were the highest since 2007-2008, during the economic crisis. This means that if we look ahead, Khun Ket believes it's possible that there could be an economic crisis or an economic slowdown. If we look ahead, it could be good for gold in the long term. Because if borrowing costs are high, it's not good. It affects the high public debt worldwide. They will have a large debt burden, right? For ordinary people, if they take out a mortgage, they will have a high interest burden. Businesses are the same. High interest rates are not good. It will affect the economy. This is looking ahead. But people are currently afraid that the Fed will raise interest rates. If we look at the short term, it seems like a negative factor. But if we look ahead to that point, past the concerns about inflation, because oil prices have already fallen, back to pre-war levels. >> $72 per barrel. But you ask why gold still doesn't seem to rise. The war seems to be over, but it's not over yet today. It's only temporarily over. Because in the next 60 days, it's the period of nuclear negotiations to permanently end the war. Nong Nami will see news that on Saturday, the US and Iran were still attacking each other. But this morning, they stopped attacking and returned to discussing the original issue, returning to the issue of the Strait of Hormuz and nuclear negotiations. So, if the MOU really happened, gold only rose for a moment because the war was only temporarily over. But if it ends permanently, I don't think gold will rise sharply. This is the war issue, and I've explained the dollar and bond yields, which are short-term negative factors right now. But ultimately, if we get past this, we can look ahead to the long-term fundamental factors. They are still there. It's not like the fundamental factors have changed completely. These long-term factors are still there. I think ultimately, gold still has a tendency to increase in the period from September to September, to the Fed meeting. Suppose the Fed raises interest rates, and the market starts to accept and respond to it. And if the Fed confirms that they will cut interest rates next year, it will be a complete change in mode. >> Yes. >> From tightening to easing again? Then gold will be good. >> Yes. Another interesting point, Khun Ket, is that recently, if we look at the investment market, we see that the US stock market, especially AI and technology stocks worldwide, have provided outstanding returns. This leads some parties or some people to believe that capital that should normally be invested in gold, or some portion of it, has flowed out of gold to these assets because they can generate higher returns. What is your view on this? Do you agree or disagree with this point? >> I agree. It has a negative impact. They will look at various ETFs to see where the money is flowing in and out. Since the war began, there have been comparisons between gold ETFs, energy ETFs, and stock ETFs. It appears that money has flowed out of gold and into stock ETFs. This is a clear trend. I think it has an impact, especially with the IPOs of stocks recently, like SpaceX in June, and in the second half of the year, there will be OpenAI. Money flows to these areas. IPOs like OpenAI, which is expected to be worth $700 billion. With such massive amounts of money, investors would want to allocate some to investments that yield quick returns. And the AI trend is still strong. Even though people fear that there might be an AI bubble like in 2000, currently, the earnings support it. The earnings released from tech and AI stocks still support it. Even though they are investing massively, and in the future, I would say we need to be cautious. If stocks rise sharply, they might become overvalued. But for now, I admit it has a negative impact. And in the second half of the year, there are more IPOs, which will have a negative impact. >> Yes, on the other hand, many people believe that on the gold side, Khun Ket, the driving force or the important factor is the buying by central banks worldwide. Khun Ket, is this still an important factor supporting gold prices currently? And is this factor strong enough to be a base for gold prices in the long term? >> I think they are still the factor that makes gold prices rise stably and sustainably, compared to buying pressure from ETFs or individual investors. That makes gold fluctuate, rising sharply and falling sharply. Investors will feel that gold is rising sharply, which they like, but falling sharply, which they don't like. But for central banks, last year they bought less than 1,000 tons. But they are still buying this year, and will continue to buy in the next 5 years. The dollarization is still a trend. We might see some outflows in March, but don't be alarmed. It's just the central banks of Turkey and Russia. Russia has sold quite a bit this year, but the central bank of Poland, a major buyer last year, is still number 1 this year. The central bank of China has been releasing news every month that they are still buying continuously. Even though they are not buying as much as Poland, it is still a pillar, one of the pillars supporting gold. Recently, I've talked about 4Ds, which are like pillars supporting gold. The first is decoupling, the world is splitting into blocs. The second is deglobalization. The world is moving away from globalization. They don't want globalization. They want to produce goods themselves. This leads to competition for resources, wanting oil, wanting rare earth minerals. These two factors will increase geopolitical risk and drive gold. The third is the dollar, which Nong Nami asked about today regarding central bank purchases. The fourth is debasement, the view that paper money is devalued due to excessive debt and money printing without asset backing. This will make tangible assets like gold still in demand. These are factors that can support gold, even though there are many negative factors right now. But these factors still exist. If that's the case, Khun Ket, looking at the second half of 2026, what is your assessment of the gold trend? Is there still an opportunity for it to become an uptrend, or do you still see it as a consolidation period? >> This is still a consolidation period. For the next 2 months, as long as the Iran-Israel war is not truly over. If it were truly over, I think gold would rise sharply and quickly. And if investors have already priced in the Fed's interest rate hikes, and if the Fed finishes raising interest rates, and doesn't accelerate hikes, then gold will rise. So, in summary, in the second half of the year, the first 2 months of the second half, gold might be sluggish. We might need to be cautious about whether it will create a new low, a bottom. This needs to be watched. But from September onwards, I think it will increase, and might rise sharply. As for whether it has bottomed out, I still think $4,000 should be the bottom. Last week, it fell to $3,960. We need to watch this zone first to see if it can form a base. If it cannot form a base, it might go down to $3,800. I got the figure of $3,800 from when it fell below the 200-day moving average in May. But before that, did it fall? It fell in 2022. We fell more than 15% below the 200-day moving average. So, I calculated it, and it would be around $4,400. From $4,440 that it fell from, it would be $3,800. Another support level is $3,600. That came from the pattern when gold rose in 1979. That year, it rose 3 times and fell 2 times, meaning it fell 2/3. So, I think when gold rose last year, it went up to $3,000. It went up to $5,600 and fell 2/3, so we might see a figure around $3,600 if we follow the pattern of 1979. So, the figures might be around this. The points where I want to buy are around $3,950-$4,000, $3,800, and $3,600. Playing in a downtrend is more tiring. It's not like the uptrend last year, where you buy on dips and it keeps rising. But now, we don't know where the bottom is, and we are being farmers now, not farmers like last year. So, farmers have to accept the risk when playing gold in a downtrend. >> Yes, and for investors who are waiting for an opportunity to buy, Khun Ket. We've preliminarily assessed that if, for example, at $3,900, as we saw it fall the other day, if $3,800 doesn't hold, and we go to $3,600, if it breaks through which price range, Khun Ket, is a significant price range where we might need to consider temporarily suspending purchases? >> Uh, actually, I have to say that gold is in a downtrend. So, I will use the 200-day moving average as the main indicator. It broke below on June 5th, at $4,440. If anyone didn't sell at that time, they might have to think, "Now, what should I do if I buy?" The most important support level, I think, is around the $3,500-$3,600 zone. It must hold. Because last year, when they were building a very strong base, there was a period from May to August when gold was around $3,100-$3,500. Finally, they accumulated energy and were able to rise in the last 4 months of last year. So, I think it's strong there, around $3,500 to $3,600. I'll use these figures. If it breaks below that, it means it's very bad. If such a strong base breaks, then we might have to say, "Hey, let's step back." At that time, step back and wait to see if it breaks below that. There will likely be another round of heavy selling. So, we have to step back first, let the selling pressure subside, and then calmly re-evaluate to see how much lower the bottom will go. So, I'll use this as a criterion. In summary, it's $3,500-$3,600. It must not break below this. >> Yes, and for long-term investors who have confidence in gold, Khun Ket. Is this a good time to start accumulating gradually, or would it be better to wait for more clarity on the direction of interest rates? Or how should we plan our purchases to be suitable for long-term investment? >> For long-term investment, you can wait first. But some people think gold has fallen a lot, so is it a good time to buy? So, the strategy now, Khun Ket, I emphasize that we still don't know where the bottom is. But it has fallen a lot. Some people have already bought some, and they wonder why it hasn't risen yet. It's a period of consolidation. It will be uncomfortable. It won't feel like an uptrend. I think it's like this. Because for the long term, some people don't need to look at the market for now. They can invest gradually. Or as I said, divide into 3 tranches. So, here, the zone of $3,950-$4,000, the second point is $3,800, the third point is $3,600. Or in the worst case, $3,500. That would be a very attractive price. Gold would be very cheap then. If it falls that much, gold would be around, let's see, maybe 58,000 baht? Uh, around 58,000 baht. It's very cheap, below 60,000 baht. Long-term investors can buy at such low costs. >> Finally, Khun Ket, what advice would you give to investors during this period when the gold market is still volatile? For those who already hold gold, those who are waiting for an opportunity to buy, or those who are deciding whether to invest in gold in the second half of this year, for both global and Thai gold. >> For those who already hold it and have a high cost, and feel uncomfortable, if it's your own money, not borrowed, and you don't need it for 1-3 years, you can hold on. Because some people can't bear to sell at a loss. Second, for those waiting to buy, it's at the points I've given. Let me repeat them: $3,950-$4,000, $3,800, and $3,600. And another question is, who else wants to buy? >> Yes, who might be deciding whether to buy gold in the second half of the year or buy other assets. >> You can allocate some of it. You can divide it. It has fallen a lot. Some people say they like tech stocks because they have good returns. I think you can allocate some to gold, start allocating some now. >> Yes. The overall picture of gold today, thank you very much, Khun Ket, for joining us to share your insights on gold for investors today. Gold is certainly a popular asset that many people are watching. So, I hope that in the future, we will have the opportunity to talk with Khun Ket again on future occasions about the future prospects of gold. For today, thank you and goodbye. >> Ah, you're welcome. Goodbye. >> Yes. We can see clearly that gold prices in this era are not driven by war alone. But what the market gives more weight to is monetary policy or the direction of Fed interest rates. Bond yields and the US dollar also affect gold prices. After this, the Fed meeting in July, US economic figures, and buying from central banks worldwide will be important factors that gold investors must closely follow. And this is the content that the program has brought to present today, regarding the important situation in the asset class of gold. And that's not all. Phenomina continues to present important content about financial markets, investment, and the economy regularly. Don't forget to like, share, and subscribe so you don't miss out on the important content we present. For today, Nami and the team must take our leave. See you again in the next topic. Goodbye. Buy mutual funds easily, no need to open a LINE app. Download Phenomina now. It includes all 21 asset management companies, more than 1,700 funds in one app. Download and start investing now. [Music] On the Phenomina app.