Thais are poised to buy more gold for a fifth straight year, as a rally in the local currency makes the bullion cheaper, complicating efforts by the central bank to curb the precious metal’s influence on the baht.

With gold prices climbing to new highs, more Thais are turning to the yellow metal for higher returns and as a safe haven against mounting global and domestic political uncertainties, said Nuttapong Hirunyasiri, managing director of MTS Gold Group, one of Thailand’s largest bullion dealers.

Thai gold demand, excluding central bank purchase, is set to climb 10% this year to 53.7 tons, according to the Thai Futures Exchange. Demand in the first half jumped 21% to 20.7 tons, World Gold Council data show.

“Thai people love to buy gold,” Nuttapong said. “Even though prices continue to rise, many people keep buying. We are seeing activities on both sides — buying and selling.”

Thailand’s affinity for gold is both cultural and historic, with the metal commonly offered at Buddhist temples and many considering it as a traditional form of saving and passing down wealth. Demand soared 13% last year, and Thailand is the only country in the world to have posted four straight years of growth through the Covid pandemic, YLG Bullion International Co. said, citing WGC data.

The baht’s 7% rally this year to its highest level since 2021 is among the reasons driving local gold demand, said Jitti Tangsithpakdi, president of Thailand’s Gold Traders Association. 

The Bank of Thailand has attributed baht’s surge partly to the rally in gold and vowed to rein in any wild swings. Thailand’s business and tourism groups have urged authorities to take steps to temper the gains as it hurts the country’s exports and tourism earnings.

The baht typically gets a boost when Thais sell gold, which is highly valued as an investment, as the dollar proceeds get converted into the local currency. It also has a much closer link to gold than other emerging Asian currencies.

Concerned about gold’s outsized influence, Thai central bank officials said they are working with the Finance Ministry to address currency moves that deviate from fundamentals.

But market players, including Jitti, downplayed the link, arguing that the baht’s gains stem more from a weaker dollar and optimism over a new government.

‘De-dollarization is also prompting people to turn to gold,” said Tipa Nawawattanasub, chief executive of YLG Bullion Futures Co. “Profit-taking in gold prices may be part of many reasons for the baht strength. But it’s not the major factor.”

Any attempts to wean Thais away from gold may prove difficult given the broader weakness in the Thai financial markets, where stocks are weak and government bond yields are at multi-year lows. With the outlook for gold prices still bullish, MTS Gold’s Nuttapong sees more Thais diving into gold.

“The sky is the limit for gold prices,” Nuttapong said. “The geopolitical problems as well as US President Donald Trump’s policies have fueled uncertainties and driven demand for gold.”