The price of gold is hovering below the $2,020/oz mark as the US market is closed for the holiday and investors await interest rate signals from the US Federal Reserve. In the local market this morning (February 20), the price of gold slipped after staying stable on the 10th day of the Lunar New Year.
By over 9am this morning, the spot gold price in the Asian market stood at $2,017.5/oz, down $0.9/oz from the close of Monday’s session in New York but almost unchanged from the same time yesterday, according to data from Kitco Exchange.
This price of global gold is equivalent to about VND 60 million/tael if converted at the USD selling rate at Vietcombank.
In the country, many large gold shops in Hanoi have not yet reopened by about 9am this morning after the busy God of Wealth day yesterday. Unlike previous years, when the domestic gold price would usually increase on God of Wealth day and then sharply decrease afterwards, the domestic gold price this year has remained stable.
Specifically, yesterday, the domestic gold price was common at VND 75.2-75.4 million/tael for buying and VND 78 million/tael for selling. For gold rings of brands such as Phu Quy and Bao Tin Minh Chau, the prices ranged from VND 64.4-64.6 million/tael for buying to VND 65.8 million/tael for selling.
By over 9am this morning, SJC Company quoted a price of VND 75.4 million/tael (buying) and VND 77.72 million/tael (selling) for SJC gold bars in Hanoi. In Ho Chi Minh City market, the company listed the prices of gold bars at VND 65.4 million/tael and VND 77.7 million/tael.
The prices of SJC gold bars are VND 17.7 million/tael higher compared to the converted global gold price, while the SJC gold ring prices are VND 4.6-4.7 million/tael higher.
The international gold price has experienced little fluctuation partly due to exchanges in the US being closed for the Presidents’ Day holiday on Monday.
According to experts, the price of gold is facing downward pressure from the possibility of the Fed maintaining a higher interest rate for a longer period, but on the other hand, the price of gold is also being supported by the geopolitical tensions in the Middle East – a factor that stimulates risk-aversion demand.
“Considering recent geopolitical developments, tensions in the Middle East could last. That’s why gold is regaining some attractiveness as a safe investment channel,” said analyst Yeap Jun Rong of IG to Reuters.
Last weekend, a cargo ship flying the British flag was attacked in the Bab al-Mandab Strait off the coast of Yemen. The British authorities said that the crew of the ship had to abandon it after an explosion.
According to technical analyst Wang Tao of Reuters, the spot gold price could switch to a new range of $2,027-2,031/oz after breaking free from recent downward trends. Investor sentiment in the gold market has improved somewhat as the Chinese gold market resumes after the holidays.
However, the possibility of the Fed lowering interest rates by June is putting pressure on the gold prices. Market attention is focused on the release of the minutes of the Fed’s January meeting, which is scheduled to be released this Wednesday. Investors expect to find clearer signals about the Fed’s monetary policy stance in these minutes.
“Any firm signal could lead to expectations of higher interest rates being maintained for a longer period and that will not be favorable for gold prices,” Mr. Jun Rong said.
In a speech on Monday, the President of the Atlanta branch of the Fed, Raphael Bostic, said he needed more data to believe that inflation pressure was actually decreasing, but he left open the possibility of lowering interest rates at some point in the coming months.
According to data from the CME FedWatch Tool, the market is betting on a 77% chance that the Fed will begin lowering interest rates in June. The possibility of the Fed lowering interest rates in March is almost gone.
