Global gold prices rose sharply on Thursday (August 29), recovering almost all of the previous session’s losses, despite a stronger US dollar and US Treasury bond yields following the revised US GDP report.
Analysts believe that even if the upcoming US inflation report, due on Friday, exceeds expectations, it will not deter the upward trajectory of the precious metal.
At the close of trading in New York, spot gold rose by $16.80/oz compared to the previous session’s close, or 0.67%, to $2,521.90/oz, according to data from Kitco Exchange.
Just before 8 a.m. on Wednesday (August 30) Vietnam time, spot gold in Asia fell by $3.50/oz compared to the US close, or 0.14%, trading at $2,518.40/oz. Converted at Vietcombank’s selling rate, this level is equivalent to about VND 75.9 million/troy ounce, up VND 100,000/troy ounce from the previous day.
In the futures market, December gold on the COMEX rose $22.50/oz, or 0.9%, to a record high of $2,562.20/oz. This was the 32nd time this year that gold futures have closed at a record high, breaking the previous record set on Monday.
Prior to this rally, world gold prices had fallen for two consecutive sessions due to profit-taking by investors and a lack of new catalysts.
In an interview with MarketWatch, Peter Spina, founder and president of GoldSeek.com, called the current upward trend in the gold market a “silent bull market”. He said there are many factors supporting gold prices at the moment.
“Geopolitical risks remain the biggest factor, the de-dollarization trend continues, and Western investors have switched from net sellers to net buyers of gold last month. Central banks and individual investors are both accumulating gold to safeguard their assets amid uncertainties,” said Mr. Spina.
According to the expert, the expectation that the Federal Reserve (Fed) will start cutting interest rates as early as next month continues to be an important supportive force for gold prices.
“In the short term, the market is questioning how many times the Fed will cut rates this year, but the mere expectation of lower rates is making gold more attractive,” Spina said.
US economic data released on Thursday reinforced the possibility of a soft landing. Initial jobless claims fell from the previous week, further reducing the likelihood of a US recession. Gross domestic product (GDP) growth for the second quarter was revised up to 3% in the second estimate from 2.8% in the advance estimate.
Both the US dollar index and US Treasury bond yields rose following these reports, putting downward pressure on gold, but the precious metal still ended the session higher.
The Dollar Index, which measures the strength of the US dollar against a basket of six other major currencies, rose 0.36% to 101.37. Recently, the index fell below 101, reaching a near two-year low.
The yield on the 10-year US Treasury bond rose 2.4 basis points to 3.865%.
In Friday’s trading, which also marks the end of August, investor focus will be on the Personal Consumption Expenditures (PCE) price index report, the most important inflation gauge for Fed policy decisions.
According to Spina, the market is “a little concerned about how strong the US economy is, how employment and inflation are doing”. “Stronger-than-expected economic figures could hinder gold speculators, but there are few signs that this silent upward trend will end soon. The $3,000/oz mark could be reached in the next few months before the gold market enters a prolonged adjustment period,” the expert said.
“Gold prices are being pulled between central banks’ net gold purchases and relatively weak investor risk appetite. Gold speculators want to see a weak jobs report next week, as this would reinforce the likelihood of a 50-basis-point rate cut by the Fed in September, which would be positive for gold,” said Michael Brown, strategist at Pepperstone.
As expected, the US Department of Labor will release the August jobs report on September 4.
“If there is a reassessment of the market’s current over-optimism about the pace of Fed rate cuts, precious metals prices could face headwinds. However, only if gold closes below the $2,500/oz level will the bears feel convinced enough to return to the gold market,” Brown said.
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