Gold prices fluctuated in a positive range during Monday’s early Asian trade (June 16th), following last week’s strong performance driven by heightened risk aversion amidst escalating geopolitical tensions. However, analysts suggest that the likelihood of gold reaching new record highs in the short term is relatively low.
As of 8:50 am Vietnam time, gold spot prices in the Asian market rose by 6.7 USD/oz compared to Friday’s close in New York, equivalent to a gain of over 0.2%. The trading price was 3,439.9 USD/oz according to Kitco exchange data. When converted using Vietcombank’s USD selling rate, this translates to approximately 108.7 million VND per tael.
At the same time, Vietcombank quoted USD at 25,852 VND (buying) and 26,242 VND (selling), a rise of 19 VND on both buying and selling rates compared to Saturday morning.
Earlier, gold prices briefly surpassed 3,450 USD/oz, climbing nearly 20 USD/oz from last week’s close. At this level, gold prices are not far from the record high of 3,500 USD/oz set back in April.
Last week, global gold prices rose by approximately 4%, while gold prices in VND terms surged by 3.9 million VND per tael. There were two primary drivers behind gold’s ascent: the resurgence of armed conflict in the Middle East following Israeli strikes on Iran, and weaker-than-expected US inflation data, which heightened expectations for an early interest rate cut by the Federal Reserve.
Israel conducted airstrikes on Iran in the early hours of Friday morning, local time, targeting the country’s nuclear facilities and missile production sites. This came after reports on Thursday of a potential attack. Iran retaliated by launching strikes on Israel. The conflict escalated as US-Iran nuclear negotiations stalled, although the US has denied any involvement or support for Israel in these attacks.
Speaking to Kitco News, Ole Hansen, head of strategy at Saxo Bank, offered his insights: “The conflict between Israel and Iran could help keep gold prices above the $3,400/oz level, but further escalation would be needed to push prices higher. Geopolitical events have triggered sharp gold price increases over the past three years, but these gains have often proven short-lived.”
The hostilities between Israel and Iran persisted over the weekend and are expected to be a key topic at the G7 summit in Canada this week. Prior to his departure for the summit, the US President expressed hope for a deal to de-escalate tensions between the two countries. However, according to sources speaking to Reuters, Iran has informed Qatar and Oman, the mediators, that it will not accept a ceasefire while under Israeli attack.
Michele Schneider, head of market strategy at MarketGauge, predicts choppy price action for gold this week as some short-term investors may opt to take profits following last week’s rally. Nonetheless, she maintains a bullish long-term outlook for the precious metal: “What’s happening in the Middle East could lead to other issues, including higher inflation. So, gold may not move much higher in the short term, but I think there’s a lot more upside potential over the long term.”
Naeem Aslam, chief investment officer at Zaye Capital Markets, advises gold investors to keep a close eye on oil prices. “If Iran threatens to block the Strait of Hormuz, through which one-fifth of the world’s oil supply passes, a surge in crude oil prices could trigger a massive flight from risky assets to safe havens like gold. Conversely, if the escalation remains limited and oil prices fall, gold’s rally could reverse as safe-haven demand diminishes,” Aslam remarked.
According to Aslam, the $80 per barrel mark for Brent crude oil could serve as a litmus test for the intensity of Middle East tensions. “If oil prices sustain above this level, gold may be poised for another rally; otherwise, expect a swift decline once tensions ease,” he added.
On Monday morning, Brent crude oil futures traded in London rose by more than 3% at one point but later trimmed those gains. As of 9:00 am Vietnam time, Brent crude was up nearly 1% from last week’s close, hovering around $75 per barrel, according to CNBC data.
In addition to developments in the Middle East and trade negotiations, global investors are also closely monitoring the Federal Reserve’s monetary policy meeting, which is scheduled for Tuesday and Wednesday. While the Fed is expected to maintain interest rates this time, investors are seeking clues about the path of interest rates in the latter half of 2025.
The US Dollar Index, which measures the dollar’s strength against a basket of currencies, started the week on a slightly positive note, climbing by nearly 0.1% to around 98.3. In the previous week, the index fell by 1.1% and briefly touched a three-year low, as per MarketWatch data.
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