Gold prices shone this week as the US dollar fell to a four-month low, driven by expectations of an interest rate cut by the Federal Reserve in September. This followed the release of lower-than-expected US job creation data for July, which fueled concerns about a weakening economy.
Spot gold ended the week at $2,432.19 per ounce, a 1.8% increase from the previous week. Midweek, prices surged to $2,470 per ounce after the US jobs report for July was made public.
In the domestic market, SJC gold bar prices on Sunday (July 28) were listed at 78.3 – 79.8 million VND per tael (buy-sell), up from 77.5 – 79.5 million VND per tael (buy-sell) a week earlier.
SJC 9999 gold rings are currently priced at:
76,150,000 – 77,550,000 VND/tael (buy-sell)
, an increase from the previous week’s range of
75,500,000 – 77,000,000 VND/tael (buy-sell).
Gold price movement during the week.
The Kitco News survey showed that both analysts and traders are optimistic about gold’s prospects for the coming week. Adrian Day, President of Adrian Day Asset Management, is among those predicting a price increase. He stated, “Gold really has the opportunity to surpass previous all-time highs due to a weakening US economy and the likelihood of an imminent Fed rate cut.” Referring to Fed Chair Jerome Powell, he added, “At the beginning of the week, he was almost eager to cut rates but was waiting for the opportunity to do so. Now, he has that opportunity. In some recent rate-cutting cycles, once the Fed started cutting, gold prices took off.”
The market has now raised its prediction for the magnitude of the first rate cut from 25 basis points to 50 basis points, expected to occur in September 2024.
Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, expects gold prices to stabilize next week. He noted, “Imminent US rate cuts and a weaker dollar have helped boost gold prices.” He drew attention to the decline in the yield of 2-year US bonds by over 40 basis points last week, the largest weekly drop so far this year. “Gold appears poised to soon revisit last month’s record high (~$2,483.75, spot). While $2,480 may not be in the cards just yet, $2,450 certainly is. Next week is expected to be quieter,” he said.
Darin Newsom, a senior analyst at Barchart.com, offered a different perspective: “I’m going to take a different tack this week… Technically, it’s a coin toss with no clear trend signals. The daily chart for December gold shows the contract has bounced from the lower end of its recent range, which means it could be headed for the upper end – near $2,540.”
Michele Schneider, a market strategist at MarketGauge.com, is optimistic about the metal’s performance next week. She stated, “Gold needs to hold $2,450.”
Senior commodities broker Bob Haberkorn, of RJO Futures, attributed Friday’s sharp sell-off to recession fears following the weak US jobs report. “I think that if anything, this is an opportunity to buy gold,” he said, with spot gold trading near $2,420 an ounce. Haberkorn dismissed the idea that gold’s recent price dips indicated traders were holding short positions. “I think it’s profit-taking,” he asserted.
“Given the issues and what’s going on in the world right now, gold is a safe haven,” he continued. “Gold prices are going higher.”
“I think we’re going to see gold prices rally next week because they’re going to rebound from Friday’s sell-off,” Haberkorn predicted. “I think what actually happened is, you’re going to see a safe-haven bid in this market. Just the fear of a US recession and the weak jobs number alone pushed gold prices higher, and it’s going to soon surpass $2,500 an ounce.”
The Kitco News survey showed that out of 14 Wall Street analysts, 11 people (79%) predicted that gold prices would rise next week, while only one person (7%) expected a decline. The remaining two analysts, or 14%, foresaw a sideways trend for gold.
Meanwhile, among 191 retail investors on Main Street who participated in the survey, 140 people (73%) expected gold prices to rise in the coming week. Twenty-eight individuals, or 15%, predicted a price decrease, while the remaining 23 people, or 12%, anticipated a sideways market.
Kitco News survey results on the outlook for gold prices for the week of August 5-9.
Regarding upcoming financial events that could impact the gold market, after a week filled with influential occurrences, the market is expected to experience a lull next week, with only a few notable events on the calendar: the US PMI for the services sector in July (due on the upcoming Monday) and the monetary policy decision by the Reserve Bank of Australia on Tuesday. The market will also closely monitor the auction of 10-year US bonds on Wednesday and the auction of 30-year bonds on Thursday.
Reference: Kitco News
