Gold prices rose for a third consecutive day to a one-week high Wednesday, as investors accumulated safe-haven assets because of the escalating Russia-Ukraine war and a softer dollar.
Bullion approached the resistance level of US$2,640-2,650 an ounce Wednesday as the dollar's rally paused after gains last week, making gold more attractive to buyers holding other currencies.
SPDR Gold Trust, the world's largest gold fund, bought 0.58 tonnes of gold on Tuesday, raising its holding to 872.2 tonnes, according to local trader MTS Gold.
The world's attention is focused on Russia as President Vladimir Putin lowered the threshold for a nuclear strike in response to a broader range of conventional attacks, days after reports said Washington, DC had allowed Ukraine to use US-made weapons to strike deep into Russian territory.
Domestically, gold traded at 43,100 baht per baht weight by midday, according to the Gold Traders Association.
"Domestic gold prices have bottomed out, rebounding to around 43,000 baht after falling to 42,100 earlier," MTS said.
Hua Seng Heng Gold Futures said the global gold price is expected to recover, but with limited upside as investors already absorbed geopolitical risks into their price calculus.
If there are no additional factors to support the price, it may remain at this level, said the trader.
Hua Seng Heng anticipates gold to have a resistance range of $2,640-2,660 an ounce, with support at $2,610-2,590. In Thailand, resistance is estimated at 43,200-43,400 baht per baht weight and support at 42,750-42,550 baht.
"The baht has strengthened slightly [from 34.75 baht to the dollar to 34.53 on Wednesday], pressuring domestic gold prices, but domestic gold prices are able to recover in line with the world gold price trend," Hua Seng Heng said in a research note Wednesday.
Meanwhile, several Federal Reserve officials are expected to shed light on the US rate cut trajectory. Traders predict a 58.9% chance of a 25-basis-point cut in December.
The market is adjusting its expectations for the Fed's cuts next year as inflation is becoming a bigger concern. Higher rates reduce the appeal of gold.