Gold prices started the new trading week on a downward trend, as international financial markets reduced expectations that the Federal Reserve (Fed) could cut interest rates. The domestic gold price this morning (February 5th) remained at around 78 million dong/tael, a difference of nearly 18 million dong/tael compared to the converted world price.
At over 9am Vietnam time, the spot gold price in the Asian market stood at $2,038.1/oz, a decrease of $2.6/oz compared to the closing price from the previous week in the New York market – according to data from the Kitco exchange. This price is equivalent to about 60.3 million dong/tael if converted at the USD selling rate at Vietcombank.
At the same time, Bao Tin Minh Chau Company listed SJC gold prices for the Hanoi market at 75.85 million dong/tael (buying) and 78.05 million dong/tael (selling).
The 999.9 plain round ring by Rong Thang Long is priced at 64.48 million dong/tael and 65.58 million dong/tael, for buying and selling prices respectively.
In the Ho Chi Minh City market, SJC Company quoted prices for the same brand of gold at 75.7 million dong/tael and 77.9 million dong/tael.
Compared to the end of the week, the gold price for gold bars and gold rings is currently moving sideways or decreasing by 50,000-100,000 dong/tael depending on the listing of each enterprise.
Compared to the converted global gold price, the retail price for SJC gold bars is still 17.6-17.8 million dong/tael higher, while the price for gold rings is about 5.5 million dong/tael higher.
The global gold price is facing downward pressure from investors who believe the first interest rate cut by the Fed will not occur in March as recently expected by the market, but rather may take place in May or even later in the year. The basis for this shift in expectation is recent US economic data which shows that the economy is still robust – good news but also showing a potential for a sharp increase in inflation if the Fed cuts interest rates too early.
Gold is an asset that does not bear interest, so a higher interest rate by the Fed for a longer period is not advantageous for the gold price. This is the main reason why investors on Wall Street predict that the gold price will be difficult to increase this week.
A weekly survey of experts by metal news website Kitco News showed that only 2 out of 12 experts surveyed (a 17% rate) predicted that the gold price would increase this week. 8 people (66%) predicted a price decrease, while the 2 remaining people (17%) predicted that the gold price would remain flat.
Speaking with Kitco News, strategist James Stanley of forex.com said he had shifted from optimism to pessimism regarding the short-term outlook for the gold price, after the gold price failed to break through an important resistance level last week.
“Gold market bulls had an opportunity last week, but they once again failed to break the gold price through the range of $2,050-2,082/oz. The fact that the Fed will not cut interest rates in March and that US job data for January is better than expected might be strong enough for gold bears to regain the upper hand. Gold prices may soon have to face their first test at the $2,000/oz mark in 2024,” Stanley said.
Senior analyst Colin Cieszynski at SIA Wealth Management, a wealth management company, also predicts that gold will decrease in price this week. “The exchange rate of the USD still dominates the gold price. If the Fed becomes less accommodating, that will push up US Treasury bond yields and the USD exchange rate. To relieve gold from the downward pressure caused by the rising trend of the USD, there needs to be an external shock like escalating geopolitical tensions, war, or new risks emerging in the banking system,” he said.
Senior analyst Jim Wyckoff of Kitco News predicted that the gold price would move sideways this week. “The gold price will fluctuate within a narrow range, with factors pushing the price up like geopolitical risks conflicting with factors pushing the price down like strong job reports and the firmness of the Fed,” Wyckoff said.
