Is a return to gold standard possible?

We are now in the middle of the holiday season.

- Chartchai Parasuk

People buy gold during the New Year period, in this Jan 2, 2020, file photo.

(PORNPROM SATRABHAYA)

Therefore, I will refrain from writing about heavy and depressing issues like the Thai economy and the outlook for 2026 and beyond. In this moment of joy, I will write about the possibility of returning to the gold standard, which some supporters say can be seen in central banks aggressively buying gold bullion to replace the dubious US dollar. The last article of the year will be about the Sovereign Wealth Fund (SWF).The SWF might not be a household name yet. But readers will hear about it more and more, and it might become an economic flagship policy to miraculously pull Thailand out of its economic slump.

Today's article is the second part of the “gold” series. The first part was about the demand-supply factors, which, in theory, are key determinants of the gold price. I basically concluded that the current gold price is determined not only by the real demand and supply of gold but also by the speculative demand for gold. Since the speculative demand is erratic, gold price movements have also become erratic.

The price of gold peaked at US$4,398 (139,900 baht) an ounce on Oct 20, before it plummeted to less than $4,000 a couple of weeks later. It seems like no one can precisely forecast the direction of the price. However, many analysts optimistically foresee it breaking $5,000 in 2026 due to strong demand for gold bullion from central banks. Indeed, central banks around the world have been aggressively buying gold. October's gold purchase was 53 tonnes, a 36% month-on-month growth. The strong gold purchase data seem to reinforce the upward movements of the price.