BANGKOK/SINGAPORE: Thai gold imports look set to stay weak after plunging to a fifth of last year's levels, with investors shying away from the metal amid prolonged political upheaval in the country.
Higher imports in 2013, when a sharp fall in gold prices prompted many consumers to bring forward purchases, have also sapped demand this year in the world's fifth biggest consumer of the metal.
Reduced shipments into Thailand, Asia's No.3 importer, could take the steam out of any short-term recovery in gold prices amid slowing growth in appetite for gold in the rest of the region.
"Investment interest in gold is a lot less because prices have been trending downwards (from the beginning of last year)," said Pawan Nawawattanasub, chief executive at YLG Bullion, Thailand's top gold importer.
"Another reason has been ... the long protests have hurt the economy and people would rather hold on to their money than spend on gold."
Gold is often viewed a safe-haven asset during times of political uncertainty, but in a prolonged crisis with declining business and consumer confidence, would-be buyers can prefer to save cash than invest in gold bars or splurge on jewellery.
Sales at YLG have fallen 30 to 40 percent this year compared to the same period in 2013, Pawan said.
Thailand has been in turmoil since anti-government protests flared up in November, the latest phase in nearly a decade of antagonism between the Bangkok-based establishment and supporters of former premier Thaksin Shinawatra.
The country has been run since December by a caretaker administration with limited fiscal powers and there is no end in sight to the crisis as protest groups seek to install an unelected government. Consumer confidence is at a 12-year low, tourists are staying away from Bangkok and public spending has been delayed.
Thai gold imports fell 81 percent to 36.351 tonnes in the first quarter of this year, compared with 192.391 tonnes in the same period in 2013, according to data on the central bank's website.
"The sharp fall in gold imports this year is due to higher global prices, which have limited import demand at a time when most Thai gold traders are well stocked," said Jitti Tangsithpakdi, president of Thailand's Gold Traders Association He added that traders had imported a lot last year due to lower prices at that time.
Gold prices fell 28 percent in 2013 after a 12-year bull run, unleashing a frenzy of physical buying across the world. This year, gold has gained about 7 percent, but some analysts say the fundamental factors supporting it are still weak.
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