Gold prices worldwide maintained a slight upward trend in Wednesday’s trading session, despite the Federal Reserve Chairman pushing back expectations that the central bank would start cutting interest rates this spring. After a sharp increase yesterday afternoon, domestic gold prices continued to rise this morning (February 1) and reached 78 million dong per tael.
At the close, spot gold prices in the US market increased by $4.5/oz compared to the previous trading session, equivalent to an increase of more than 0.2%, closing at $2,040.5/oz. At one point during the session, gold prices increased by more than 1%.
Gold prices dropped by 1.3% in January but managed to maintain the key psychological threshold of $2,000/oz throughout the month.
At the end of the first regular monetary policy meeting of 2024, the Federal Reserve kept the federal funds rate at 5.25-5.5%, a decision that was in line with expectations. However, during the press conference after the meeting, Federal Reserve Chairman Jerome Powell dismissed the possibility of the Fed starting to cut interest rates in the first quarter of this year – something that the financial markets had recently been hoping for.
“I don’t think by March the committee will be in a situation where it is ready to cut rates,” Powell said.
Tai Wong, an independent precious metals analyst in New York, believes that while Powell made some subtle statements, the main message in his press conference was still “no rate cut in March.”
According to Wong, although it has successfully resisted the Fed’s late rate cut, in the future, US economic data will strongly impact gold prices.
With hope fading for the Fed to have its first rate cut in March, traders are now mainly betting on the possibility of the Fed reducing interest rates from May. Overall, the belief that the Fed will cut interest rates this year remains a supporting factor for gold prices.
After the Fed’s meeting, the yield on the US 10-year Treasury bond fell below 4%, the lowest level in 3 weeks. However, the Dollar Index, which measures the strength of the US dollar against 6 other major currencies, increased beyond 103.8 points, the highest in 6 weeks. These two factors have had opposite effects on gold prices: lower bond yields support gold prices, but a stronger US dollar puts downward pressure on precious metals.
Daniel Ghali, a strategist at TD Securities, believes that strong physical gold demand and the trend of central banks’ net buying of gold will continue to support gold prices in the future.
On the other hand, the net selling trend of gold exchange-traded funds (ETFs) continues to put pressure on gold prices. The world’s largest gold ETF, SPDR Gold Trust, sold nearly 2 tons of gold on Wednesday’s trading session, reducing its holdings to over 851 tons of gold. In less than 2 weeks, the fund has sold about 10 tons of gold.
At more than 9am this morning Vietnamese time, spot gold prices in the Asian market stood at $2,040.4/oz, down $0.1/oz compared to the New York closing session. This price is equivalent to about 60.4 million dong per tael if converted at the selling rate of USD at Vietcombank.
At the same time, Phu Quy Group listed SJC gold bars for the Hanoi market at 75.7 million dong per tael (buying) and 77.95 million dong per tael (selling). Compared to yesterday morning, SJC gold prices at this company have increased by 800,000 dong per tael (buying) and 650,000 dong per tael (selling).
However, compared to the end of yesterday afternoon, the price of SJC gold bars at Phu Quy has increased by 300,000 dong per tael and 150,000 dong per tael respectively.
Phu Quy’s plain round gold ring 999.9 has a price of 64.25 million dong per tael and 65.35 million dong per tael, increasing by 250,000 dong per tael at both ends of the price range.
In Ho Chi Minh City, SJC Company quoted the same branded gold bars at 75.7 million dong per tael and 78 million dong per tael for buying and selling respectively, increasing by 800,000 dong per tael and 600,000 dong per tael compared to yesterday morning.
In the past 2 days, SJC gold prices have increased by about 1.2 million dong per tael, while the world gold prices have remained relatively stable.
Compared to the equivalent world gold prices, retail prices of SJC gold bars are currently higher by 17.6 million dong per tael, while gold rings are higher by 5 million dong per tael.