Gold Prices Soar: Global Market Reacts to US Jobs Report

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Gold prices soared during Thursday’s trading session (May 10) after US data revealed a larger-than-expected rise in jobless claims – a data point that bolsters the likelihood of the Federal Reserve beginning to cut interest rates this year. Domestically, gold prices surged past VND 90 million per tael at the opening of the morning session on May 10, reaching an all-time high.

At the close of the previous night’s session, according to Vietnam time, the spot gold price in the US market rose by $38.3/oz compared to the previous session’s close, equivalent to nearly 1.7%, reaching $2,346.9/oz, according to data from the Kitco exchange.

According to the weekly report from the US Department of Labor, the number of initial jobless claims in the country rose to its highest level since last August. In the week ending May 4, the number of initial jobless claims in the US increased by 20,000 from the previous week, a higher-than-expected increase, to 231,000 people.

This data increases the expectation that the Fed will begin cutting interest rates at some point this year. Gold is a non-interest-bearing asset, so gold prices tend to be bolstered when expectations of Fed rate cuts rise.

Additionally, gold prices in this session were supported by a weakening US dollar and declining US Treasury bond yields.

Following the US employment report, the Dollar Index, which measures the strength of the US dollar, fell by about 0.3%, to just over 105.2 points. Gold is priced in USD, so a weaker dollar is beneficial for gold prices.

A US Treasury bond auction attracted strong demand, leading to falling yields. The yield on the 10-year bond fell by 3 basis points to around 4.45%, while the yield on the 2-year bond also fell by 3 basis points to around 4.81%.

“What we’re seeing is gold continuing to be influenced by expectations of Fed rate cuts, or the timing of Fed rate cuts,” said David Meger, a High Ridge Futures analyst.

Mr. Meger stated that the latest data indicates a weakening in the US job market, raising the possibility of the Fed cutting interest rates earlier than expected.

Gold price movement in the past month
Gold price movement in the past month. Unit: USD/oz – Source: Trading Economics.

In the futures market, traders are betting on a 67% chance that the Fed’s first rate cut will come in September, according to data from the FedWatch Tool on the CME exchange.

At around 9:00 am Vietnam time, the spot gold price in the Asian market rose by $3.8/oz compared to the close of the US session, equivalent to a 0.16% increase, trading at $2,350.7/oz according to Kitco.

This price is equivalent to nearly VND 72.2 million per tael when converted at Vietcombank’s selling exchange rate, an increase of VND 1.2 million per tael compared to yesterday morning.

In the domestic market, gold bullion prices surpassed VND 89 million per tael in the early afternoon of yesterday and continued to break the VND 90 million per tael mark at the opening of this morning’s session – setting a new record.

In just two days, SJC gold bullion prices increased by about VND 3.3 million per tael, while gold ring prices rose by more than VND 1-1.1 million per tael. Gold bullion prices are rising faster than global gold prices, leading to an increasing gap with international prices.

At the opening, Phu Quy Group listed SJC gold bullion prices for the Hanoi market at VND 88.3 million per tael (buying) and VND 90.5 million per tael (selling), an increase of VND 2 million per tael compared to yesterday morning.

Phu Quy’s 999.9 fine gold rings were priced at VND 74.9 million per tael and VND 76.5 million per tael, respectively, an increase of VND 1.05 million per tael and VND 1.15 million per tael.

The Rong Thang Long gold rings from Bao Tin Minh Chau Company were priced at VND 75.02 million per tael and VND 76.52 million per tael.

In Ho Chi Minh City, SJC Company quoted SJC gold bullion prices at VND 88.2 million per tael and VND 90.5 million per tael.

SJC gold rings were priced at VND 74.3 million per tael for the buying side and VND 76-76.1 million per tael for the selling side, depending on the weight of the product.

Compared to the international gold price, the retail price of SJC gold bullion is VND 18.3 million per tael higher, while the gold ring price is about VND 4.3 million per tael higher.

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