The global gold price started the new trading week with a slight decline, but the domestic gold price this morning increased by VND 300,000 per tael compared to the end of the week, reaching VND 79 million per tael in some places. Experts believe that the world gold price is still under short-term downward pressure, but the “door” for long-term increase is still wide open as the Federal Reserve will have to start a monetary policy easing cycle.
At nearly 10 am, the Phu Quy Group listed the SJC gold price for the Hanoi market at VND 76.8 million per tael (buying) and VND 78.8 million per tael (selling). Compared to Saturday morning, the SJC gold price at this company has increased by VND 300,000 per tael.
The Phu Quy brand pure 999.9 gold ring is priced at VND 64.45 million per tael and VND 65.55 million per tael, respectively for buying and selling, up VND 50,000 per tael at each end of the price.
In Ho Chi Minh City market, the SJC Gold Company quoted the SJC gold price for buying and selling at VND 76.8 million and VND 79 million per tael, respectively, increasing by VND 300,000 per tael at each end of the price compared to Saturday morning.
At the same time, the spot gold price in the Asian market decreased by $4.8 per ounce compared to the end of the previous week in New York, equivalent to a decrease of more than 0.2%, to $2,031.5 per ounce – according to data from the Kitco exchange.
This price level is equivalent to about VND 60.7 million per tael if converted according to the selling exchange rate of USD at Vietcombank, a decrease of VND 100,000 per tael compared to the end of the week.
Compared to the converted world gold price, the retail SJC gold price is currently higher by VND 18.1-18.3 million per tael.
This morning, Vietcombank quoted USD at VND 24,450 (buying) and VND 24,820 (selling), an increase of VND 20 at each end of the price compared to the end of the week.
Last week, the world gold price increased by 1.4% thanks to the decrease in the value of the USD and the demand for risk hedging due to geopolitical tensions in the Middle East. However, this precious metal – a non-interest-bearing asset – is facing downward pressure due to the possibility of the Federal Reserve keeping interest rates higher for longer.
Recent data shows that the US economy is growing steadily and inflation is decreasing slower than expected. This fact has led the financial market to no longer bet on the possibility of the Fed cutting interest rates from March, but instead believing that the central bank will start cutting interest rates in June. The market’s forecast for the number of times the Fed will cut interest rates this year has also decreased to 4 times instead of 6 times as at the beginning of the year.
In addition, the recent upward trend of the US stock market does not benefit the gold price, as investors are more attracted to the continuous setting of new records by the Dow Jones and S&P 500 indices. Gold exchange-traded funds (ETFs) such as SPDR Gold Trust have also continuously sold net due to investors withdrawing capital to switch to newly opened bitcoin ETFs in the US.
“The biggest risk to the gold price now is if the inflation data heats up again. Last month’s inflation data pushed back the timing of when the Fed could cut interest rates. Now the expectation is set for June, but who knows, the Fed may not cut interest rates until September,” high-level commodity broker Bob Haberkorn of RJO Futures told Kitco News.
Colin Cieszynski, Chief Strategist at SIA Wealth Management, believes that if the data allows, the Fed will start cutting interest rates in June, and that will benefit the gold price. “If the Fed intends to cut interest rates 3 times this year, they will have to start in June. Then there will be rate cuts in September and December. Regular reductions like that indicate that the Fed is acting completely normally and not being influenced by the US presidential election in November,” Cieszynski said.
This week, investors’ attention will be focused on the report on the US Personal Consumption Expenditures (PCE) price index – a measure of inflation favored by the Fed – and the statements of Fed officials on monetary policy. The PCE report will be announced by the US Department of Commerce on Thursday.
According to Haberkorn, Fed officials will maintain a consistent view that they need patience before starting to cut interest rates. “If only one of them signals an early interest rate cut, the gold price will benefit greatly. However, I am quite impressed that gold is holding the $2,000 per ounce mark at the current interest rate. This suggests that the world is being dominated by anxiety and the demand for gold as a risk hedging tool is still high,” the expert commented.
