Dollar Index Rebound Suppresses Gold and Silver Prices, Thai Baht Depreciation Supports Thai Gold Prices

August 1, 2026, the global precious metals market experienced dramatic turbulence. Due to better-than-expected US manufacturing data and hawkish remarks by Federal Reserve officials, the dollar index rebounded by 0.6% to 104.8% in a single day, and the 10-year US Treasury yield rose to 4.35%, putting pressure on international gold and silver prices. Spot gold briefly dropped below $2,480 per ounce, setting a two-week low; silver lost 31 dollars, trading at $30.92 per ounce. However, amidst this decline, local gold prices in Thailand showed resistance, with the Thai baht depreciating against the dollar to 36.8, keeping the price of gold bars priced in Thai baht around 42,300 Thai baht per baht weight, creating a distinct contrast with international gold prices. ## Dollar Strength Pressures Gold and Silver in the Short Term The Purchasing Managers' Index (PMI) for manufacturing released by the Institute for Supply Management (ISM) on August 1 was 52.7, higher than the market expectation of 51.2, indicating that US manufacturing is still expanding and economic resilience is strong. Simultaneously, Fed Chair Powell reiterated the "data-dependent" stance in his speech, hinting that further rate hikes are not ruled out if inflation rises. This statement quickly cooled expectations for a September rate cut, with the Chicago Mercantile Exchange (CME) FedWatch tool showing a probability of a September cut of only 38%, significantly lower than the 61% from last week. The dollar index is expected to strengthen, while precious metals face selling pressure. Analysts point out that gold and the dollar have a negative correlation; a strengthening dollar makes gold priced in dollars more expensive for non-US currency holders, weakening physical demand. Silver, due to its higher sensitivity to global economic conditions, experienced a rebound amid positive manufacturing data, but ultimately could not withstand the dollar's strength and closed lower. ### Thai Baht Depreciation Provides a Buffer, Thai Gold Prices Show Relative Support When international gold prices fall, Thai investors found that local gold prices remained almost unchanged. The main reason is that the Thai baht depreciated by 0.7% against the dollar on August 1, trading at 36.82 Thai baht per dollar, setting a three-month low. Since Thai gold prices are referenced against international gold prices, the depreciation of the baht exactly offset the decline in dollar-priced prices. The daily price from the Gold Traders Association of Thailand showed that the purchase price for gold bars was 42,200 Thai baht per baht weight, and the selling price was 42,300 Thai baht per baht weight; jewelry purchase prices were 41,375 Thai baht, and selling prices were 42,400 Thai baht, nearly flat compared to the previous day. The baht depreciation is mainly due to the Bank of Thailand maintaining an accommodative monetary policy due to weak economic recovery, widening the interest rate differential between the Thai baht and the dollar. Foreign investors selling excess amounts in the Thai stock market reached 6.8 billion Thai baht, further suppressing the trend of the Thai baht. For local investors holding the Thai baht, gold remains a reliable tool to hedge against inflation and exchange rate risks. ## Highlights in the Downturn: Indian and Southeast Asian Demand Support the Long Term Despite short-term dollar pressure on gold prices, physical gold demand is quietly increasing. Gold imports in India before Diwali surged by 45% compared to the same period last year, and continuous gold buying by the Chinese central bank has not ceased, with official gold reserves increasing to 2,312 tons in June, marking the 19th consecutive month of increase. In Southeast Asia, gold jewelry sales in Vietnam and Indonesia are growing steadily, and local Thai gem dealers are reflecting the return of tourists driving gold jewelry consumption, with jewelry buying in the Bangkok Chinatown in July increasing by 15% compared to the previous month. World Gold Council's latest report indicates that gold purchases by central banks reached 312 tons in the second quarter, a decline from the first quarter's 402 tons, but it remains well above the five-year average. The association estimates that central bank gold purchases in 2026 will exceed 1,200 tons, setting a new historical high. In the long term, zero interest rates and geopolitical uncertainty will continue to drive up demand for gold reserves. ## Silver Industry Demand Looks Promising, But Faces Short-Term Inventory Pressure Silver prices briefly surpassed $33 in July, setting an eight-year high, but have recently retreated. Besides the dollar factor, data from the London Bullion Market Association (LBMA) shows that London silver inventories reached 28,500 tons at the end of July, the highest since October last year, indicating sufficient market supply and the conclusion of speculative profits. However, silver's demand for solar photovoltaic energy remains strong; global solar installations increased by 21% in the first half of 2026, and silver paste consumption accounts for thirty percent of total industrial demand. Metals Focus analysts estimate that the silver market will face a supply shortage for the fifth consecutive year in 2026, with a deficit of 4,800 tons. Regarding the Thai market, the trading volume for silver futures on the Thailand Futures Exchange (TFEX) reached a monthly high in July with 52,000 contracts, indicating rising interest among local investors in silver. However, most analysts suggest that silver prices may further fall to support at $30, investors should wait for a bottom signal. ## Technical Analysis: Where is the Key Support for Gold Price? From a technical perspective, after gold price breaks below $2,500, the next support level is $2,470 (the 50-day moving average). If this level is broken, it may test $2,420. However, the daily RSI indicator has dropped to 42, approaching oversold territory, suggesting a potential sharp rebound. For silver, $30 is a psychological barrier, with stronger support at $29.6 (the 200-day moving average). However, if the dollar index retreats below 104, gold and silver are expected to resume their uptrend. For Thai investors, since the trend of the Thai baht depreciating against the dollar has not changed, local gold prices will not suffer a significant drop even if international gold prices fall. It is recommended that investors allocate gold bars in batches and diversify risk with silver ETFs (such as GOLD funds). An ING analyst stated, "Short-term fluctuations are inevitable, but if you look at the long term, the bull market for gold and silver has not ended." ## Outlook: Focus on Non-Farm Employment and Central Bank Meetings The next market focus will be the release of US non-farm employment data on August 7, and the Jackson Hole Global Central Bank Meeting from August 21 to 23. If employment data weakens, expectations for a Fed rate cut will rise, potentially leading to further dollar depreciation and a renewed upward trend for precious metals. Thai investors need to closely monitor changes in the Thai baht exchange rate, especially at the interest rate meeting the Bank of Thailand plans to hold in September; if interest rates are maintained, the Thai baht still has room to depreciate, making potential returns for gold priced in Thai baht even more attractive. In summary, international gold and silver prices are short-term constrained by a strong dollar and high real interest rates, but long-term support factors remain solid. For local Thai investors, exchange rate protection reduces gold price volatility, offering a relatively stable safe-haven choice. Investors should remain patient, allocate in batches when prices fall, and wait for the next shift in macroeconomic sentiment.