Exploring a potential baht-gold price link

Is there a correlation between the rising rate of the precious metal and the appreciation of the Thai currency?

- NAREERAT WIRIYAPONG

Authorities are trying to probe a possible link between gold prices and the baht, though some officials think the argument is overblown.

As global gold prices skyrocket, debates are ongoing in Thailand about the significant impact of gold trading flows on the volatility and appreciation of the baht.

Policymakers finally stepped in to strengthen gold trading oversight, aiming to curb the strong baht, which outperformed regionally in recent months despite a subdued Thai economy.

According to Patrick Poulier, executive vice-president and head of financial markets function at Siam Commercial Bank, global gold prices and the baht exhibit a high positive correlation: when gold prices rise, the baht tends to appreciate.

Data from 2025 indicates the baht and gold prices had a correlation coefficient of 0.8-0.88, the highest among emerging Asian currencies. A value of 1.0 means an exact correlation.

Thailand has a massive and active domestic gold market, making it a major global trading hub. Gold is deeply ingrained in Thai culture as a primary investment and savings asset. Many Thai households and individuals hold physical gold.

When global gold prices rise significantly, Thai households and even exporters tend to sell their gold holdings to take profits. The proceeds from these sales are typically in dollars and are then converted back into baht in the local market. This large-scale conversion creates significant demand for the baht, causing the currency to strengthen.

Ona fundamental basis, Thailand has been a net importer of gold, which is traded in dollars. According to Kuala Lumpur-based Maybank, gold imports surged in October last year by 315%.

Don Nakornthap, senior director of reserve management at the Bank of Thailand, said the price of gold is not the main cause of the baht's appreciation.