Gold is intrinsic to Thai culture and it is gifted during weddings, birth, and other religious events. It is often held as an investment in the form of jewellery, bars and coins. Over the years, the Thai bullion market has evolved to be one of the most sophisticated in the ASEAN region, complete with exchange-traded gold futures, OTC spot, and physical. These products are actively traded and contribute to the vibrancy and competitiveness of the Thai bullion market.

Gold bullion is the bread and butter of Thai gold traders, and contributes much to the Thai economy in the form of savings and stored value. During times of crisis, gold has been the last-resort resource for many locals, who have had to sell their gold for cash to survive. Coupled with volatility and gold prices hitting an all-time high of US$2,050/oz., there has been a large rush to liquidate this asset in the past year, resulting in a copious volume of scrap and physical selling.

The total physical investment demand in Thailand in 2020 was 300 tonnes, with a total export value worth US$13 billion. The top three Thai bullion houses alone contributed almost 10% of total Thai exports in the last year. As in many other countries during the pandemic, local jewellery demand has dropped significantly, and sales at many jewellery stores have plunged by at least 30% to 40% as lockdowns curtailed trading.

Gold’s supply chain was also affected, with fewer international flights and limited cargo capacity. Amid COVID-19, logistics planning and flight management has become a key challenge for Thai bullion traders. Thai Airways – one of the country’s major carriers – filed for bankruptcy and ceased all flights in and out of Bangkok. Flights are limited, and the cost of transport has almost tripled.

While economic recovery is expected in 2021, it is still extremely challenging for Thai bullion traders as flights have not fully resumed and the major airlines are still undergoing restructuring. We believe the Thai market demand will remain strong and competitive, coupled with continual high volumes, albeit with lower margins.

MTS Gold (MTS) is at the forefront as one of Thailand’s largest precious metals importer and exporter. And we continue to lead with a strong suite of physical and financial trading capabilities, which includes a world-class refinery, an established Global Futures and Loco London spot trading infrastructure.

Locally, MTS has been a pioneer in Thailand, and our efforts have helped the Thai Futures Exchange’s Gold Futures contract to become the fifth largest gold futures trading contract in the world, and the exchange to have the largest volume of gold futures contracts in ASEAN. We have received many awards from TFEX for our contributions and efforts.

Globally, MTS is the first Chicago Mercantile Exchange (CME) trading member to facilitate CME Gold Futures in Thailand. As a leading member on the Shanghai Gold Exchange International (SGEI) board, we have received an outstanding international member award, and co-partnered with SGE in its Gold Belt and Road initiative, innovating gold leasing and realising a new business model with SGE in China.