The price of gold fell sharply below USD2,300/oz during trading on Tuesday, but eventually recovered to reach this crucial level. Demand for gold as a safe haven is decreasing due to easing Middle East tensions while downward pressure on gold prices is increasing due to the possibility of the US Federal Reserve keeping interest rates higher for longer.
Domestic gold prices rose sharply this morning despite the State Bank of Vietnam’s efforts to increase supply by selling gold bars.
At the close of the US session, spot gold prices fell USD5.4/oz, a decrease of approximately 0.2%, to USD2,322.5/oz – according to data from the Kitco exchange. During the session, gold prices briefly dropped to USD2,290/oz, the lowest level since April 5.
In the context of lack of support and increased profit-taking, analysts consider the fact that gold prices have remained above the critical psychological level of USD2,300/oz a positive sign. However, the downside risk for the precious metal is significant and largely dependent on US economic data, expected to be released this week.
At nearly 09:00 AM this morning Vietnam time, spot gold prices in the Asian market fell USD2.1/oz compared to the close of the US session, trading at USD2,320.4/oz – according to Kitco. This price is equivalent to approximately VND71.3 million per tael if converted according to the USD selling rate at Vietcombank, a decrease of VND300,000 per tael compared to this morning.
World gold prices surged in March and April due to escalating geopolitical tensions in the Middle East. During this surge, gold prices increased by USD400/oz, setting an all-time high above USD2,430/oz on April 12.
However, following Israel’s airstrikes on Iran last Friday, Tehran declared that it had no plans to retaliate. Additionally, both sides have signaled a lack of desire to engage in a large-scale war. This de-escalation has provided some relief to the financial markets, reducing the demand for safe havens and increasing risk appetite.
According to CEO Julia Khandoshko of Mind Money, this means that gold – a traditional “safe haven” – has lost its previous upward momentum. According to Ms. Khandoshko, the market is shifting to monitor signals from the US, where persistent inflation and economic resilience could lead to the Fed delaying interest rate cuts.
Recent statements from Fed officials indicate that the central bank is in no hurry to cut interest rates. Gold, a non-interest-bearing asset, is at a disadvantage in a higher interest rate environment. The market currently anticipates the Fed’s first rate cut in September, but there have also been predictions that the Fed may not cut rates before 2025 or may even raise them further.
Manufacturing Purchasing Managers Index (PMI) data released on Tuesday showed a decline in US manufacturing activity in March. However, investors are more focused on the Gross Domestic Product (GDP) report to be released on Thursday, followed by the Personal Consumption Expenditures (PCE) report on Friday. The PCE is the Fed’s preferred measure of inflation.
According to Ms. Khandoshko, gold has been heavily bought recently and may be due for a technical correction. However, Fawad Razaqzada, an analyst at City Index, believes that gold prices are unlikely to fall significantly because many investors who missed the recent surge in gold prices are ready to jump in and buy the dip if prices fall.
The world’s largest gold exchange-traded fund (ETF), SPDR Gold Trust, purchased 1.7 tons of gold on Tuesday, bringing its total gold holdings to 833.6 tons.
At around 09:00 AM this morning, Phu Quy Corporation listed the price of SJC gold bars in Hanoi at VND81.8 million per tael (buy) and VND83.8 million per tael (sell), an increase of VND1.7 million per tael and VND1.3 million per tael compared to earlier this morning.
Phu Quy quoted the price of 999.9 smooth round rings of Phu Quy brand at VND73.7 million per tael and VND75.4 million per tael, representing the buy and sell prices, an increase of VND500,000 per tael and VND200,000 per tael compared to this morning.
Bao Tin Minh Chau Company’s 999.9 smooth round rings of Rong Thang Long brand are priced at VND73.68 million per tael and VND75.38 million per tael.
In the Ho Chi Minh City market, SJC Company quoted the price of its namesake gold bars at VND81.8 million per tael and VND83.8 million per tael.
The buy price of 999.9 smooth round rings of SJC brand is VND73 million per tael, and the sell price is VND74.8-74.9 million per tael, depending on the weight of the product.
The State Bank of Vietnam said that in the gold auction on March 23, 2 members won 3,400 taels of gold out of a total of 16,800 taels of gold offered for sale. The winning bids ranged from VND81.32-81.33 million per tael.
The USD exchange rate in the international market has cooled down after many days of remaining high. The Dollar Index has now fallen to the 105.6-105.7 point range, from a 5-month high of 106 points that had been sustained for several days.
