The Bank of Thailand governor said recent gold-trading curbs have weakened
gold's influence on the baht and could be tightened further. In March the BOT
capped online gold trades at 50 mln THB per person per day (~$1.5 mln) and
encouraged larger investors to settle in USD rather than THB; the governor said
the cap could be cut to 30 mln THB or lower if needed. The 60-day correlation
between the baht and gold prices has fallen from a 0.85 peak last year to 0.3 in
April, a four-year low. The BOT is increasing scrutiny: requiring declarations
for physical gold withdrawals above 2 kg has reduced such withdrawals by about
70%. Authorities are also tightening controls on cash payments for gold
purchases over 10 mln THB and on cash deposits/exchange transactions above 5 mln
THB. The governor said he supports a Thai Finance Ministry proposal to tax some
gold transactions to boost transparency, provided rates are low and do not
burden legitimate businesses or consumers.
