The Golden Opportunity: Unveiling the Latest Trends in the Precious Metal Market

Gold prices fluctuated during the morning trading session on August 16, with gold bars listed by businesses ranging from 123.5 to 124.5 million VND per tael (buying-selling). Meanwhile, gold ring prices remained below the threshold of 120 million VND per tael, unchanged from the previous trading day.

Specifically, Bao Tin Minh Chau’s gold rings were traded at 116.8 – 119.8 million VND per tael (buying-selling); PNJ at 116.6 – 119.5 million VND per tael; SJC listed at 116.6 – 119.1 million VND per tael; while DOJI remained at 109.3 – 110.3 million VND per tael.

In the global market, spot gold prices currently stand at $3,334 per ounce, continuing its downward trend. The main reason for this is the rebound of the US dollar from its lowest level in over two weeks, along with the recovery of yields on 10-year US Treasury bonds from their one-week low.

Additionally, newly released inflation data has put significant pressure on the market. The US Department of Labor reported that the Producer Price Index (PPI) for July rose 0.9% from June, far exceeding the Dow Jones forecast of 0.2%. Year-over-year, PPI increased by 3.3%, well above the expected 2.5%. Meanwhile, weekly jobless claims stood at 224,000, lower than the expected 228,000, indicating a resilient labor market.

Some experts suggest that the strong PPI data may shake the expectation of an early interest rate cut by the Federal Reserve (Fed). Speaking to CNBC, Ole Hansen, head of commodity strategy at Saxo Bank, stated that the higher-than-expected PPI is likely to be followed by a significant rise in core PCE inflation for July, prompting the Fed to be more cautious about rate cuts. Prior to the release of PPI data, the market priced in a 97% probability of a Fed rate cut in September, which has now dropped to 93%.

The strengthening of the US dollar makes gold more expensive for investors holding other currencies, thereby weakening demand and putting downward pressure on prices. Conversely, when the dollar weakens, gold often benefits from increased appeal to international capital flows.

Ryan McIntyre, managing partner at Sprott Inc, believes that gold prices could remain volatile in the near future as the market grapples with the implications of the US debt conundrum. However, net purchases by central banks globally since the Russia-Ukraine conflict erupted remain an important “cushion” for gold prices, providing reassurance to investors.

Heng Koon How, head of market strategy at UOB (Singapore), maintains a positive outlook on gold prices in the medium to long term, predicting that the precious metal could rise to $3,700 per ounce by mid-next year. According to him, the US dollar will continue to face depreciation pressure, while safe-haven demand remains elevated.

UOB analysts forecast that the Fed is likely to resume its rate cut cycle at the September meeting, following the disappointing July nonfarm payrolls report. This would push short-term interest rates lower, while long-term interest rates, such as yields on US Treasury bonds, could remain high due to concerns over the debt burden. As a result, the US yield curve would steepen, exerting further pressure on the dollar.