Global gold prices dipped on Tuesday (August 13) as investors quickly took profits, despite a weaker US dollar and falling US Treasury bond yields. The market is cautious ahead of potentially significant gold price fluctuations as the US is set to release a crucial inflation report on Wednesday.
At the close of the New York trading session, spot gold fell by $8.7/oz, equivalent to a 0.35% decrease, settling at $2,465.2/oz, according to data from the Kitco exchange.
As of early Monday (August 14) Vietnam time, spot gold prices in the Asian market dipped by $1/oz compared to the previous session’s close, equivalent to a 0.04% decrease, trading at $2,464.2/oz. Converted at Vietcombank’s selling exchange rate, this price is equivalent to nearly VND 75.1 million/tael, a decrease of VND 300,000/tael compared to the previous day.
On Monday, spot gold prices rose to a 10-day high, not far from the record high of $2,483.6/oz set on July 17. Year-to-date, the precious metal has climbed 20% on expectations of an upcoming interest rate cut by the US Federal Reserve (Fed).
The upward momentum in gold prices weakened on Tuesday as concerns about a widening war in the Middle East eased, with Iran not yet acting on its threats to retaliate against Israel for the assassination of a Hamas leader in Tehran.
Additionally, profit-taking by some investors also contributed to the downward turn in gold prices.
Nonetheless, the precious metal continues to find support from the prospect of lower interest rates in the US, amid a downward trend in inflation in the world’s largest economy.
According to the US Department of Labor, the Producer Price Index (PPI), a measure of wholesale prices, rose 0.1% in July from the previous month. This increase was lower than the 0.2% rise predicted by economists in a Dow Jones survey and matched the June reading.
The PPI data bolsters investors’ confidence in the continuation of the disinflationary trend in the US economy. The market anticipates the Consumer Price Index (CPI), which the Department of Labor is expected to release on Wednesday, to show a 0.2% month-over-month increase in July, following a surprise 0.1% dip in June.
Should the CPI data deviate significantly from forecasts, expectations about interest rates could shift dramatically, potentially leading to substantial movements in gold prices.
According to data from the FedWatch Tool on the CME exchange, the market is betting on a 100% likelihood of the Fed cutting rates at all three remaining monetary policy meetings this year.
The five largest banks in the US predict that from now until mid-2025, the Fed’s federal funds rate will fall by at least 1.75 percentage points from its current range of 5.25-5.5%.
Wells Fargo Bank forecasts the Fed’s rate to drop to a range of 3.25-3.5% by mid-2025, implying a 2 percentage point cut from its current level. Analysts from Wells Fargo anticipate the Fed to slash rates by a total of 1 percentage point in the September and November meetings this year, followed by a 0.25 percentage point cut each in December 2024 and the first quarter of 2025.
These interest rate expectations put downward pressure on the US dollar exchange rate and US Treasury bond yields, thereby boosting the appeal of gold.
The Dollar Index, which measures the strength of the US dollar, edged slightly lower on Tuesday, settling at 102.61 points.
Yields on 10-year US Treasury bonds fell to a one-week low, hovering around the 3.85% level.
“Despite profit-taking, ongoing unrest in the Middle East, recent volatility in global financial markets, and expectations of Fed rate cuts will continue to encourage investment inflows into gold,” said Alex Ebkarian, chief operating officer of Allegiance Gold.
“The US CPI inflation data on Wednesday could further boost expectations of rate cuts, providing additional upward momentum for gold prices. It’s only a matter of time before gold sets a new record,” Commerzbank said in a report.
Which bank offers the highest interest rate for online savings in early February 2024?
Beginning February 1st, 2024, several banks have been adjusting their interest rates downwards for savings accounts ranging from 1 to 24 months. Based on a survey conducted across 16 banks, the highest annual interest rate for online savings deposits at a 6-month term is 5%, while for a 12-month term, it is 5.35%.
4 Factors Putting Pressure on USD/VND Exchange Rate in Q1/2024
With the currency exchange rate fluctuating in the first few weeks of 2024, Mr. Ngo Dang Khoa, Director of Foreign Exchange, Capital Markets and Securities Services at HSBC Vietnam, highlights four factors putting pressure on the USD/VND exchange rate in Q1/2024…
Market Update on February 2nd: Oil, Copper, Iron & Steel, Rubber, and Sugar Prices Decline, Gold Surges to Almost 1-Month High.
At the end of the trading session on February 1st, the prices of oil, copper, iron and steel, rubber, and sugar all dropped, while natural gas hit a nine-month low and gold reached its highest point in nearly a month.
‘King of spenders’ Phan Minh Thong warns of ‘shocking’ changes in the US market from a $500,000 pho bowl perspective.
“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.
