World gold prices fell sharply in Tuesday’s trading session (March 12) after the US released higher-than-expected February inflation figures – data that raises the possibility of the Federal Reserve (Fed) maintaining higher interest rates for longer. In the country this morning (March 13), golden ring prices “evaporated” to 1.4-1.5 million dong/tael, while gold prices fell below 82 million dong/tael.
At the close of the night trading session in Vietnam time at the New York market, spot gold prices fell $24.2/ounce, or 1.1%, to $2,158.6/ounce – according to data from the Kitco exchange.
A report from the US Labor Department released Tuesday showed that the consumer price index (CPI) rose 0.4% in February compared to January and 3.2% compared to the same period last year. The monthly increase is in line with expectations, but the annual increase is 0.1 percentage point higher than the forecasted 3.1% increase that economists made in a survey by Dow Jones.
The core CPI, which excludes two groups of goods with significant and frequent price fluctuations, energy and food, increased 0.4% based on the month and 3.8% based on the year. Both increases are 0.1 percentage point higher than forecast.
“Inflation data has indeed been hot, but the market had already anticipated part of this issue. At first, after the report was released, the gold price hardly had a significant reaction. But afterwards, the price began to fluctuate heavily,” said independent precious metals analyst Tai Wong to Reuters.
With slow decline in inflation and a prolonged risk of staying below the Fed’s 2% target, the market sees the Fed having difficulty cutting interest rates quickly and sharply this year. However, fundamentally, the market still believes that the first rate cut will be conducted by the Fed in June this year.
According to Wong, gold speculators are still looking for reasons to push prices higher. “Attention will now shift to the Fed’s monetary policy meeting next week. At this meeting, the Fed will provide an updated forecast on interest rates,” the trader said.
The FedWatch Tool from the CME exchange shows that traders are betting 69.8% on the likelihood of June as the start of the Fed’s monetary policy easing cycle, down from 71.7% in the previous session. The Fed’s upcoming meeting will take place on March 19-20.
Gold prices set an all-time high around $2,200/ounce last week. Many analysts believe that at such price levels, even without downward pressure from interest rates, gold prices can still face selling pressure from investors’ profit-taking needs.
According to Aakash Doshi, head of North America commodity market research at Citi Research, in the short term, gold prices will transition to a consolidation state and can stabilize at around $2,100/ounce before breaking through the $2,200/ounce level by the end of the second quarter of this year.
In Vietnam this morning, Phu Quy Group listed SJC gold bar prices for the Hanoi market at 79.9 million dong/tael (buying price) and 81.9 million dong/tael (selling price). Compared to the same time yesterday, SJC gold bar prices at this company decreased by 400,000 dong/tael in the buying direction and 300,000 dong/tael in the selling direction.
Tran rounding 999.9 of Phu Quy brand has a price of 68.5 million dong/tael and 69.9 million dong/tael, corresponding to the buying and selling prices, down 1.5 million dong/tael and 1.4 million dong/tael compared to yesterday morning.
Bao Tin Minh Chau Company listed the price of 999.9 smooth round gold ring of Rong Thang Long brand at 69.03 million dong/tael and 70.38 million dong/tael, down 1.77 million dong/tael and 1 million dong/tael compared to yesterday morning.
In the Ho Chi Minh City market, SJC Company listed gold bar prices of the same brand at 79.8 million dong/tael and 81.8 million dong/tael, down 500,000 dong/tael on each end compared to yesterday morning.
SJC round rings have a price of 68 million dong/tael (buying price) and 69.3-69.4 million dong/tael (selling price) depending on the weight of the product, down 900,000 dong/tael in the buying direction and 950,000 dong/tael in the selling direction.
Spot gold prices in the Asian market are at $2,158/ounce, down $0.6/ounce compared to the closing of the Tuesday trading session in the New York market – according to data from Kitco.
At this exchange rate, the price is equivalent to about 64.5 million dong/tael if converted according to the selling rate of the USD at Vietcombank, down 600,000 dong/tael compared to yesterday morning.
Compared to the converted world gold price, the retail price of SJC gold bars is still higher by 17.4 million dong/tael, while the price of gold rings is higher by 5.9 million dong/tael.
