World gold prices are facing downward pressure after the Federal Reserve’s meeting minutes reaffirmed the stance of keeping interest rates higher for longer. The domestic price of gold this morning (February 22) did not hold the VND 78 million/tael mark, significantly reducing the gap compared to the world gold price.
At nearly 10 am, Phu Quy Group listed SJC gold price for the Hanoi market at VND 76 million/tael (buying) and VND 77.9 million/tael (selling), a decrease of VND 500,000/tael and VND 400,000/tael, respectively, compared to the same period yesterday.
Phu Quy’s smooth round 999.9 ring has a price of VND 64.2 million/tael and VND 65.3 million/tael, an increase of VND 200,000/tael at each end compared to yesterday morning. The smooth round 999.9 Dragon Ascending ring from Bao Tin Minh Chau Company has a price of VND 64.37 million/tael and VND 65.47 million/tael.
In Ho Chi Minh City market, SJC company quoted gold price for the same brand at VND 75.7 million/tael and VND 77.9 million/tael, a decrease of VND 500,000/tael at each end compared to yesterday morning. SJC smooth round 999.9 has a price of VND 63.4 million/tael (buying) and VND 64.6-64.7 million/tael, depending on weight.
At the same time, the spot gold price in the Asian market stood at $2,027.3/oz, an increase of $0.6/oz compared to the closing of the previous night in New York – according to data from Kitco. This price is equivalent to about VND 60.3 million/tael if converted according to the selling exchange rate at Vietcombank, unchanged compared to yesterday morning.
Compared to the converted world gold price, SJC retail gold price is currently VND 17.6 million/tael higher, down from VND 18.1 million/tael yesterday morning. The gap in the price of gold rings with the world is from VND 4.4-5.2 million/tael.
In Wednesday’s session in New York, spot gold rose $1.7/oz, closing at $2,026.7/oz. This is the highest closing price of global gold in over a week. However, downward pressure on gold prices is increasing as the possibility of the Fed keeping interest rates higher for longer has been reaffirmed in the January meeting minutes released on Wednesday.
The minutes showed that monetary policy makers at the Fed are concerned about the risks of cutting interest rates too soon, and are uncertain about how long interest rates need to be maintained at their current level. In addition, Fed officials also do not want to reduce interest rates quickly after the easing cycle begins. After the minutes were released, the market continued to bet on the Fed’s first interest rate cut in June and 3-4 cuts throughout the year.
Gold prices surged last year as the market bet that the Fed would cut interest rates from March and have 5-6 rate cuts in 2024.
According to analysts, gold prices did not decline sharply after the release of the Fed meeting minutes because they were supported by risk aversion due to political tension in the Middle East. Analyst Jim Wyckoff of the Kitco Metals precious metals news site believes that as long as the Israel-Hamas war in Gaza continues, the Middle East remains tense and the gold price will continue to be supported.
In addition to the Gaza war, the “fire hotbed” in the Middle East has heated up further as Iran-backed Houthi rebels continue to launch attacks on cargo ships in the Red Sea and the Bab al-Mandab Strait, with at least 4 more ships attacked by unmanned aerial vehicles and missiles since last Friday.
With the opposing impact of interest rate expectations and political tensions, the immediate future of gold prices will continue to fluctuate within a narrow range – independent analyst Tai Wong in New York said in his statement to Reuters. According to Wong, investors will focus on the US Personal Consumption Expenditures (PCE) Index report – the Fed’s preferred inflation gauge, the overall employment report for January in the US, and Chairman of the Fed Jerome Powell’s testimony before Congress. These data and information can cause significant fluctuations in gold prices.
In a sign of investor pessimism about the prospects of gold prices, the world’s largest gold ETF fund, SPDR Gold Trust, continues to sell off gold. On Wednesday, the fund sold 6.4 tons of gold, reducing holdings to 829.8 tons of gold. This week, the fund has net sold more than 8 tons of gold, after dumping 14 tons of gold in the previous 2 weeks.
The Dollar Index, which measures the strength of the USD against a basket of 6 other major currencies, closed on Wednesday at 104 points, down from 104.1 points the previous session.
