Global gold prices set a new record during Thursday’s trading session (September 26) as investors remained optimistic about the global monetary policy easing environment. Silver prices rose in tandem with gold, reaching their highest level in nearly 12 years.
At the close of trading, spot gold prices in New York rose by $16.80/oz compared to the previous session’s close, equivalent to a 0.63% increase, reaching $2,674.50/oz, according to data from the Kitco exchange.
As of 8:00 a.m. Vietnamese time on Friday (September 27), spot gold prices in the Asian market had decreased by $2.50/oz compared to the US close, equivalent to a decrease of nearly 0.1%, trading at $2,672/oz. When converted at Vietcombank’s selling exchange rate, this price is equivalent to VND 79.8 million/troy ounce, an increase of VND 600,000/troy ounce compared to the previous day’s morning session.
With this increase, gold prices have set a new record and are approaching another key milestone of $2,700/oz. The $2,600/oz milestone was achieved by the precious metal just one week ago.
“The strength of gold prices is like an upward spiral. The strong momentum is attracting speculative capital into the gold market, despite the rise in US Treasury yields,” said independent analyst Ross Norman.
US Treasury yields rose even as the Fed cut interest rates aggressively at its September 18 meeting, and the market is betting even more on the possibility of the central bank taking similar action in November. On Thursday, the yield on the 10-year maturity increased by 1.1 basis points to 3.791%. The yield on the 2-year maturity increased by 6.1 basis points to 3.614%.
According to data from the CME exchange’s FedWatch Tool, interest rate futures traders are betting on a 51% chance that the Fed will cut interest rates at its November 7 meeting. This probability has decreased significantly from the previous day’s level of over 57%.
The US Dollar Index, which measures the strength of the US dollar against a basket of six other major currencies, reversed its upward trend and fell after a strong rally on Wednesday. The index closed Thursday’s session at just over 100.5 points, down from 100.9 points in the previous session.
The rapid rise in gold prices has led many experts in recent days to predict a sharp downward correction.
In a report released on Wednesday, Jonathan Krinsky, BTIG’s chief market technician, said he remained optimistic about the outlook for gold prices over the next 6-12 months. However, he added that gold prices may be ready for a downward correction in the coming weeks as daily gold price charts show a “depleted uptrend.” He also noted that weekly charts are showing “negative momentum divergence in overbought territory.”
Nonetheless, Mr. Krinsky considers the gold price correction to be “tactical opportunities” that investors should take advantage of to buy.
Following gold’s upward trend, spot silver prices rose 0.7% on Thursday to $32.06/oz. During the session, silver prices touched $32.71/oz, the highest level since December 2012.
“Silver prices will continue to rise in the coming months as central banks continue to cut interest rates and China maintains its stimulus measures,” said Amelia Xiao Fu, chief market analyst at BOCI. Ms. Fu also believes that silver prices could rise to the $37/oz level.
Silver, a precious metal that serves both as an investment safe haven and an important industrial material, such as in photovoltaic products like solar panels, has risen more than 36% this year. Gold prices, meanwhile, have climbed 29% since the beginning of the year.
According to Aneeka Gupta, Director of Macroeconomic Research at Wisdom Tree, one of the main catalysts for the rise in silver prices is the increase in gold prices. She stated that the gold-silver price ratio needs to fall through silver’s outperformance.
The gold-silver price ratio, calculated as the number of silver ounces required to purchase one ounce of gold, reflects the relative value of silver to gold.
The focus of investor attention in Friday’s trading session will be on the speech of Fed Chairman Jerome Powell at a conference. The presidents of the New York Fed, John Williams, and the Fed’s vice president for supervision, Michael Barr, will also speak at the event.
“Mr. Powell’s speech will be the place to look for clues about the amount of rate cuts in the next rounds. But the question is when the next rounds of rate cuts will occur, not whether they will happen,” said Norman.
