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Global gold prices rise 10% in first quarter

Global gold prices rose to the highest in 12 months, up almost 10% year-on-year in the first quarter because of unpredictable US policy, says YLG Bullion & Futures chief executive Tipa Nawawattanasub.

In the first quarter of this year gold prices shot up by an average of 8.4% to US$1,248.63 an ounce because of indications the US Federal Reserve would slow its pace of interest rate increases instead of dispensing them rapidly as earlier expected.

The signals, coupled with the failure of President Donald Trump to push his healthcare policy through the Republican-controlled Congress, sent the US dollar downhill.

Mr Trump made numerous ambitious promises during the election campaign, especially on economic stimulus policies through fiscal measures. His failure to overhaul the healthcare system, a major election promise, means the 2010 Affordable Care Act -- known as Obamacare -- remains in place, casting doubts on whether the inexperienced president will be competent enough to pass other legislative initiatives.

In the meantime, a fracture in the EU has ramped up volatility across the world, starting with the UK where the Brexit process has started the same year as France, Germany and the Netherlands hold national elections.

The political instability has prompted investors to shift to a safe haven like gold to alleviate risk, pushing gold prices up steadily during the first quarter this year.

However, domestic retail prices rose only 500 baht per one baht ounce, or 2.5%, below the global price increase because of pressure from the strengthening baht against the greenback.

For the second quarter, the major factor that will affect global prices is how investors respond to Mr Trump's foreign policies and domestic economic stimulus, as a positive response will lift risk assets, depressing gold prices, Ms Tipa said.

But if US policies turn trade partners into opponents or if Mr Trump falters on another legislative plan, gold prices will continue rising, she said. If the Fed signals the next interest rate hike, this could also swing gold prices, Ms Tipa said.

The first round of French elections is on April 23 and the second on May 7. A right-wing victory is likely to raise EU instability.

Given the market's high volatility, YLG suggests investors buy when gold prices fall to a support line at $1,200 an ounce, or 19,600 baht per one baht ounce (at 34.50 to dollar), and sell when resistance hits $1,272 an ounce or 20,800 baht per one baht ounce. If the price can go beyond that resistance line, then $1,286-1,300 an ounce, or 21,000-21,200 baht, is the next line, Ms Tipa said.

"Investors must have a clear plan on when to buy and sell, as the market is really hard to predict," she said.

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