The domestic gold bar price hit Bt10,750 per baht (15.24 grams) yesterday, a new record high, after speculative trading pushed up the prices in New York, London and Hong Kong markets to a 26-year high.

"The price could be pushed past US$600 [Bt23,300] per ounce in the next couple of days if the speculation continues," said Jitti Tangsithpakdi, president the Gold Traders' Association.

He said he was concerned that the rapid rise would cause doldrums in domestic gold sales in April, as high prices would scare shoppers away from gold shops.

On Thursday the bar gold price quoted in the New York Mercantile Exchange for June contract hit a new high at $591.80 per troy ounce.

Hong Kong gold prices closed markedly high Friday at $585.20-$585.70 an ounce, compared to Thursday's close of $575.50-$576.00.

According to Jitti, if the baht weakens, the pressure on domestic gold prices will accelerate. He said it could reach as high as Bt11,000 per baht.

Yesterday the Thai currency closed at Bt38.84 per US dollar, marginally down from Bt38.85 on Thursday's close in Asia.

 The US unit was ranged between Bt38.80 and Bt38.88 on Friday.

The baht has continued strengthening in the past months, in tandem with other regional currencies as the greenback is suffering as a result of the US's massive current-account deficit.

Supporting the baht yesterday were better-than-expected February trade data from the Bank of Thailand. It could have risen further but for concerns about political uncertainty after the election on Sunday.

Jitti said the political tensions had not affected the gold price, which relies heavily on the global prices.

"The rise of the gold price was driven by nothing but the new cycle of speculation and the intention to close the fiscal-year balance sheet with profit.

There is no theoretical reason for the rise except that the hedge fund has racked up the price," said Jitti.

Jitti also expressed concern that the sharp rise would hurt gold sales, especially during the upcoming Songkran festival in the middle of this month, a holiday that gold-traders count on for increased business.

"With the gold price soaring up like this out of the blue, I think it will take quite a long time for gold-trading in the market to return to normal," said Jitti.

"Earlier I thought the Songkran festival would increase trading volume. However, now that the price has gone this high, gold-trading is very likely to be in the doldrums."

Last year the gold price rose from a low of Bt7,550 per baht in February 2005 to a peak of Bt10,450 on December 12.

After that the price hovered around Bt10,100 to Bt10,550 per baht before hitting a new high of Bt10,650 in early February.

Piyarat Setthasiriphaiboon

The Nation