The global gold market is undergoing significant changes, with demand in Thailand and worldwide seeing a notable increase, according to a recent report from the KResearch Center.
This resurgence is reflected in Thailand's gold reserves, which increased to 8.3% in 2024, a rise from 12.2% just before the COVID-19 pandemic.
Nang Sao Kajana Chokepaissalsilp, a researcher at the KResearch Center, stated that the rising demand for gold in both Thailand and globally is driven by three main groups: central banks, investors, and consumers. The revival of gold demand started post the COVID-19 crisis, aligning with the upward trend in global gold prices that have been hitting record highs, including surpassing 3,045 USD per ounce.
This growth signifies that the share of gold in international reserves for central banks globally has seen a significant uptick, estimated to reach close to 20% in 2025 from the lows during the pandemic.
“The desire to accumulate gold has surged in response to uncertainties around economic stability and investment opportunities,” Chokepaissalsilp explained.
Thailand, despite the global trend toward gold accumulation, faces distinct challenges and opportunities. The Thai gold market showed a marked increase in the consumption of gold during 2024, with households seeking gold both for investment and as a shield against economic volatility.
The report highlighted that while global demand for gold plummeted during the pandemic, it has gradually rebounded. In Thailand, the average consumer demand has reverted to 41.8 tons per year, reflecting a growing inclination among households to view gold as a primary form of savings.
Consumers purchasing gold items for adornment has also contributed to this trend, illustrating a cultural appreciation for gold in Thai society.
Interestingly, the market for gold futures has also seen a rise, with open interest for Gold Online Futures significantly increasing from 27,281 contracts at the end of last year to 48,156 contracts by March 2025. This trend indicates an evolving landscape in how Thai investors engage with gold.
However, the relationship between gold prices and the Thai baht remains complex. Over the last year, a negative correlation of -0.83 has been noted between gold prices and the USD/THB exchange rates, suggesting that as gold prices rise, the baht tends to strengthen, impacting investment behaviors.
“The fluctuating gold prices influence the baht's value, resulting in increased volatility compared to other currencies in the Asian region,” explained Chokepaissalsilp.
Predictably, the baht's behavior is expected to soften against the USD throughout 2025, with projections estimating it may reach 35.5 THB per USD by year-end.
In addition, the ongoing U.S. trade policies under President Donald Trump, particularly aimed at fostering protectionist measures, pose both risks and opportunities for the Thai economy. Since his previous term, his administration's emphasis on increasing tariffs against nations with significant trade surpluses with the U.S. has initiated diverse reactions from various countries, including Thailand.
The analysis from March 19, 2025, indicates that the U.S. may impose reciprocal tariffs that could raise the average tariff on Thai exports by about 10%. In comparison, neighboring countries such as Vietnam and the Philippines may only see increases of 1-5%.
This shift in trade policy could diminish the competitive edge of Thai goods in the U.S. market, particularly affecting the agricultural and automotive sectors.
“Countries need to proactively engage in bilateral negotiations with the U.S. to mitigate the impacts of rising tariffs and maintain favorable export conditions,” suggested the analysis.
To counter potential fallout from these protectionist policies, several strategies have emerged within the region. Countries are increasing collaboration in investment areas, including Vietnam significantly ramping up its imports from Thailand to offset potential losses in U.S. markets.
The Thai government faces both challenges and opportunities from these geopolitical and economic shifts, including a chance to align domestic production with emerging global supply chains while facing the implications of international tariffs.
Analysts emphasize the importance of adapting to these changing dynamics to bolster Thailand's economic resilience and ensure continued growth in key export sectors.
Please check back for updates on Thailand's gold market and U.S. trade policies as further developments unfold in 2025.
