Gold prices surged on Thursday, reclaiming the key $2,300 per ounce level, after two consecutive sessions of sharp declines. The rebound was fueled by a weaker US dollar, which pulled back from its two-month peak, as investors awaited US inflation data for clues on interest rate trajectories.
As of Friday morning (June 28) in Vietnam, according to Kitco, spot gold prices in Asian markets dipped by $7 per ounce compared to the previous session’s close, trading at $2,322.40 per ounce. This equates to approximately 71.3 million VND per tael if converted using Vietcombank’s selling exchange rate, a rise of 700,000 VND per tael from the previous day.
On Thursday, New York spot gold prices settled at $2,329.40 per ounce, marking a substantial increase of $30.60 per ounce, or 1.3%, from the previous close.
On Wednesday, gold prices fell nearly 1% to a two-week low as the US dollar strengthened. However, with the dollar’s retreat on Thursday, gold prices swiftly rebounded.
The Dollar Index, measuring the greenback’s strength against a basket of six major currencies, concluded Thursday’s session below the 106 level. Nonetheless, it rebounded on Friday morning, reclaiming the two-month peak above 106.
The second revision of US economic growth data, released on June 27, indicated a 1.4% increase in the country’s gross domestic product (GDP) for the first quarter. While this figure was higher than the 1.3% rise estimated in the initial revision, it reflected a significant slowdown from the 3.4% growth recorded in the fourth quarter of 2023.
Additionally, the US Department of Labor’s weekly report showed a decline in initial jobless claims for the previous week, but the number of unemployed individuals in mid-June climbed to its highest level in two and a half years.
Overall, these data points did not alter market expectations regarding the Federal Reserve’s potential rate cut in September. Nonetheless, gold’s volatile swings continued to reflect investor uncertainty ahead of the crucial inflation report.
The US Department of Commerce will release the Personal Consumption Expenditures (PCE) price index report on Friday. The core PCE, the Fed’s preferred inflation measure, is forecasted to rise 2.6% year-over-year in May and 0.1% from the previous month, according to a Dow Jones poll of economists.
Investors are anticipating that the report will indicate a further cooling of inflation in the US economy, bolstering the likelihood of a Fed rate cut this year. A weaker-than-expected PCE report would strengthen this prospect, benefiting gold prices. Conversely, a hotter-than-expected PCE reading could trigger a retreat in gold prices.
In a recent report, Goldman Sachs asserted that gold remains the best hedge against geopolitical risks and global inflationary pressures. The bank predicted that gold prices could climb to $2,700 per ounce this year, representing a 16% increase from current levels, driven by robust demand from central banks in emerging economies and Asian households.
Gold’s appeal as a safe-haven asset could be further enhanced in the event of an escalation in trade tensions, providing a buffer against potential stock market declines. Additionally, gold’s potential to rise in response to concerns over US government debt or a perceived lack of independence by the Fed from the new US administration is highlighted in the report.
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“In the US, a bowl of pho costs about $15-18, plus a $20 tip (around 500,000 Vietnamese dong). Compared to Vietnam, where breakfast in Saigon or Hanoi costs around 50,000 dong per meal, and a plate of banh cuon with all the toppings in Hai Phong costs 20,000 dong,” Mr. Thong recounted.
