Bangkok: The surge in crude oil prices, stemming from renewed clashes in the Middle East, has fueled market expectations of rising inflation, putting pressure on the Federal Reserve to potentially raise interest rates again. The Thai baht touched its weakest level in about a month, and gold prices fell sharply.
According to Thai News Agency, Kasikorn Research Center reported that the Thai baht traded at approximately 33.33-33.35 baht per US dollar this morning, compared to yesterday's closing level of 33.27 baht per US dollar. During trading, the baht touched its weakest level in approximately one month at 33.36 baht per US dollar, following the decline in global gold prices in Asian markets this morning. Furthermore, the overall trend of Asian currencies weakened, contrasting with rising global oil prices driven by news of clashes between the US and Iran, and the Japanese yen weakening back below 160 yen per US dollar. Meanwhile, Brent crude oil prices rose above $96 per barrel.
The US dollar gained ground following rising US bond yields amid expectations that the Federal Reserve (Fed) may raise interest rates at its September meeting due to inflation risks and concerns about the fragility of the US fiscal position. The 10-year US Treasury yield surged to 4.80%, the highest since January 2025, while the 30-year yield reached 5.27%. Meanwhile, Japanese bond yields jumped to 3% yesterday, the highest in 30 years, driven by global inflationary pressures and comments from the US regarding intervention to support the weakening yen, which had reached 160 yen per dollar. This led to market expectations that the Bank of Japan (BOJ) might raise interest rates sooner than expected.
For today's trading range, the initial estimate is 33.20-33.40 baht per US dollar. Key factors to watch include the situation in the Middle East, foreign investor flows, the direction of global gold prices, as well as July factory orders and the Federal Reserve's Beige Book report.
The Gold Traders Association reported that the first gold price announcement this morning showed a sharp drop of 1,150 baht compared to yesterday's closing price. The selling price of gold bars is 67,900.00 baht per baht weight, and the selling price of gold ornaments is 68,700.00 baht per baht weight. The reason for the sharp drop in Thai gold prices this morning is the continuous decline in the global Gold Spot market, which is now around US$4,294 per ounce.
On the COMEX (Commodity Exchange) gold futures market, the December delivery contract closed down $85.10, or 1.90%, at $4,396.40 per ounce. This was due to the yield on 10-year US Treasury bonds surging to 4.7880%, raising concerns about inflation and triggering a global bond sell-off. The strengthening dollar also made gold, priced in US dollars, more expensive and unattractive to investors holding other currencies. Furthermore, the rise in bond yields increases the opportunity cost of holding gold, as it is a non-interest-bearing asset.