Gold prices rebounded above the $3,200 per ounce mark during Tuesday’s trading session (May 13th), as bottom-fishing by some investors prevented the precious metal from breaching a critical support level. Additionally, increasing prospects of declining interest rates also played a significant role in gold’s recovery following a sharp sell-off earlier.
As of early Friday morning (May 14th) in Vietnam, according to Kitco, a leading precious metals exchange, the price of gold was trading at $3,243.30 per ounce, which translates to approximately VND 102.1 million per tael, reflecting an increase of VND 400,000 per tael from the previous day’s opening price. At the same time, Vietcombank, one of Vietnam’s largest banks, quoted the buying and selling rates for USD at VND 25,750 and VND 26,140, respectively, a decrease of VND 10 from the previous day’s rates.
On Tuesday, gold futures on the COMEX exchange settled at $3,251.20 per ounce, reflecting an increase of $24.50 or nearly 0.8% from the previous session’s close. Similarly, gold for immediate delivery on the COMEX exchange rose by 0.6%, ending the day at $3,247.80 per ounce.
Buying at relatively low levels pushed gold prices higher after a 2.6% decline on Monday. Gold experienced a sharp sell-off at the start of the week as the U.S. and China agreed to temporarily halt most of the tariffs imposed on each other’s goods for 90 days. The risk-on sentiment led to reduced demand for safe-haven assets like gold.
“Gold prices underwent a significant adjustment on Monday following the news of a U.S.-China trade agreement. However, the remaining 30% tariffs imposed by the U.S. on Chinese goods continue to pose a challenge to China’s economy,” remarked Bart Melek, a strategist at TD Securities.
Given the uncertainty surrounding the outcome of the 90-day truce and the possibility of a comprehensive agreement to end the trade dispute, many investors viewed the dip in gold prices as a buying opportunity.
According to the U.S. Labor Department, inflation in April fell short of expectations, with the Consumer Price Index (CPI) rising 2.3% year-over-year, the weakest increase in four years, and below the forecasted 2.4% rise according to a Dow Jones poll of economists.
Following the release of the CPI data, expectations grew that the Federal Reserve might cut interest rates by 0.25 percentage points in their July meeting, with the probability rising to 32.5% according to the FedWatch Tool from CME Group. Gold, being a non-interest-bearing asset, stands to benefit from earlier rate cuts by the Fed.
However, speculators are currently betting on a rate cut in September rather than in June or July.
“The CPI report provided some support to the gold market as it didn’t give the Fed additional reasons to delay a rate cut,” remarked Jim Wyckoff, a senior analyst at Kitco Metals, in a report.
The world’s largest gold-backed ETF, SPDR Gold Trust, sold 2.6 tons of gold on Tuesday, reducing its holdings to 936.5 tons, according to data from their website. On Monday, when gold prices declined sharply, the fund purchased 1.2 tons of gold. In the last month, the fund has been net selling gold, particularly after gold prices surged past $3,500 per ounce in April.
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