Gold prices edged higher at the start of the new trading week as analysts said bearish pressure was building in the short term for the precious metal. Domestic gold prices reached a record high of VND86 million per tael, more than VND15 million higher than the global gold price converted at the current exchange rate.
As of 9 a.m. this morning (May 6), spot gold prices in Asia were at $2,308.5 per ounce, up $6.3 per ounce from the closing price on Friday in the U.S., or 0.25%, according to data from the Kitco exchange.
This price is equivalent to around VND70.8 million per tael if converted using the USD selling rate at Vietcombank, up by VND200,000 per tael compared to Saturday morning.
At the same time, the Saigon Jewelry Company (SJC) has increased its price quote for SJC gold bullion in the Ho Chi Minh City market to VND83.8 million per tael (buy) and VND86 million per tael (sell), increases of VND300,000 per tael and VND100,000 per tael, respectively, compared to the end of the week.
In the Hanoi market, the Phu Quy Group listed SJC gold bullion prices at VND83.7 million per tael and VND85.9 million per tael, increases of VND200,000 per tael and VND100,000 per tael.
This is a record price range for gold bullion and is VND15.1-15.2 million higher per tael than the converted international gold price.
Prices of various 999.9 gold ring products increased by VND50,000-100,000 per tael compared to the end of the week and are currently around VND4.5 million higher per tael than the world gold price.
In Hanoi, the Phu Quy Group’s Phu Quy smooth round ring is priced at VND73.85 million per tael (buy) and VND75.35 million per tael (sell). The Bao Tin Minh Chau Company quoted its value of round Dragon Lord rings at VND73.73 million per tael and VND75.33 million per tael.
In Ho Chi Minh City, the SJC Company quoted its value of smooth round gold rings at VND73.15 million per tael for the buy price and VND74.85-74.95 million per tael for the sell price, depending on the weight of the product.
According to Kitco News, the fact that the gold price is hovering around the $2,300 per ounce mark could lead to increased profit-taking pressure in the short term, resulting in the risk of a further price drop. Many analysts believe that for the gold price to establish a clear trend, the market needs to receive clearer signals about interest rates, in the context of the U.S. Federal Reserve (Fed) increasingly unlikely to start cutting rates this summer.
“The market is now expecting the Fed to cut rates as early as September. Gold prices are currently weak because many investors are taking profits despite the fact that the fundamentals are still tilted towards higher prices. During this period, gold prices may remain sensitive to statements by Fed officials and U.S. economic data. This is information that could provide further clues about the timing of the Fed’s rate cuts in 2024,” Lukman Otunuga, FXTM’s market analysis director, told Kitco News.
The analyst believes that gold prices still have some technical upside momentum, but investors should pay attention to the $2,300 per ounce level. “A move below $2,300 per ounce could see gold prices test the $2,230 per ounce level. If $2,300 per ounce proves to be reliable support, the bulls could then retest the $2,390 per ounce level,” he said.
Bark Melek, head of commodity strategy at TD Securities, said he sees limited upside potential for gold in the near term as the Fed is in no rush to cut rates.
“Inflation is still too high for the Fed to be comfortable starting to cut rates at their next meeting. The latest employment data has not been enough to entice ETF and fund managers to increase their buying of gold. Therefore, the upside is currently capped, with $2,330/oz a reasonable short-term target for the bulls,” Melek said. However, he also believes that prices could move towards the $2,500 per ounce level if the market becomes more certain about the timing and extent of the Fed’s rate cuts.
Not much U.S. economic data will be released this week, but instead several Fed officials will be speaking about monetary policy.
The U.S. dollar strengthened slightly in the international market early this week, with the Dollar Index reaching nearly 105.1 points.
Last week, the Dollar Index lost more than 0.8%, but gold prices still fell by 1.8% – marking the second consecutive week of losses.
