For decades, gold sat politely outside the foreign-exchange conversation.
It was a hedge against inflation, a shelter in crises, an asset of last resort—but rarely a variable that moved currencies themselves. Exchange rates were explained in the familiar grammar of trade balances, interest-rate differentials and capital flows. Gold belonged to another chapter.
That separation is beginning to fray in Asia.
The first clear signal has come from Thailand. In recent months, the baht has emerged as one of Asia’s strongest currencies, an outcome that sits uneasily with the country’s weak growth, high household debt and persistent political uncertainty. Conventional explanations—exports, rates, fiscal policy—only go so far. Markets have increasingly looked elsewhere. They have looked to gold.
Thailand is unusual in one important respect: private ownership of physical gold is widespread, and gold trading is deeply embedded in the domestic economy. When global gold prices rise, households and traders sell physical holdings, receive dollars and convert them into baht. In effect, higher gold prices translate directly into foreign-exchange demand.
Thailand’s central bank has acknowledged this linkage openly. Officials estimate the correlation between gold prices and the baht at around 0.7, among the highest in Asia, and note that on certain days gold transactions account for a substantial share of currency flows. In some episodes, gold trading has reportedly driven close to half of the upward pressure on the baht.
This matters because it challenges a long-standing assumption: that gold is a passive store of value rather than an active force in currency markets.
The global backdrop reinforces the point. According to the World Gold Council, headline gold demand reached 1,257.9 tonnes in the third quarter of 2025, up 5 per cent year on year. Jewellery consumption continued to contract under the weight of record prices, but investment demand surged 47 per cent, while central banks added 219.9 tonnes, a 10 per cent increase from a year earlier. Gold is no longer merely being hoarded; it is being mobilised.
Thailand’s trade data shows how directly this feeds into the currency. Between January and September 2025, gold imports reached 207.9 tonnes, up 41.9 per cent from a year earlier, with the import value rising 18.4 per cent to 462.7 billion baht. Over the same period, the baht appreciated roughly 9–10 per cent against the dollar, making it one of the region’s best-performing currencies.
What makes this episode more than a local curiosity is that it coincides with a second structural shift: the digitisation of gold itself.
Gold is quietly being rebuilt for a financial system that no longer runs exclusively through banks. Tokenised gold—digital tokens backed one-for-one by physical bullion—now trades around the clock, across borders, without reference to foreign-exchange market hours or banking intermediaries. The combined market capitalisation of tokenised gold has climbed to roughly $4.3 billion, with a single product, XAUT, accounting for just over 52 per cent of the total.
This is not a return to a gold standard, nor is it a substitute for fiat currency. But it does introduce a new channel for capital movement—one that sits outside traditional FX statistics. When savings migrate from local currency not into dollars, but into gold value directly, the pressure on exchange rates becomes harder to trace, and easier to misread.
Asia is particularly exposed to this shift. Trust in gold remains high, digital adoption is rapid, and cross-border financial experimentation is already well advanced. Thailand has demonstrated how physical gold can feed straight into currency strength. Tokenised gold has the potential to accelerate that mechanism, compressing time and distance, and moving value without ever passing through the visible plumbing of the FX market.
The implications extend beyond Thailand. In countries such as South Korea, persistent currency weakness has become harder to reconcile with headline trade surpluses. Policymakers have tended to blame outward portfolio investment or global dollar strength. Those factors matter—but they may no longer be the whole story. If part of the capital outflow is bypassing foreign-exchange markets altogether, moving instead into gold or gold-linked digital assets, the traditional diagnostic tools are incomplete.
This is not a revolution. No central bank is anchoring its currency to bullion. But gold is reclaiming a quasi-monetary role at the margins of the system—acting less as insurance, and more as an alternative expression of trust.
Thailand is already feeling the effects in its exchange rate. Others may follow. The foreign-exchange market still speaks the language of banks and dollars, but capital is learning new dialects.
Gold, characteristically, is doing so without saying a word.
*The author is the managing editor of AJP
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