Gold prices increase in world trading session on Friday (16/2), despite another report showing higher inflation in the US than expected. In Vietnam, the price of gold fluctuates strongly around 78-79 million VND/tael, while the price of gold continues to rise and reaches a record 66 million VND/tael.
At the close of the New York market, spot gold prices rose $9.2/ounce, equivalent to an increase of nearly 0.5%, reaching $2,014.2/ounce – according to data from the Kitco exchange.
However, this week, global gold prices have fallen about 0.6% under pressure from the exchange rate of the US dollar and the increasing interest rates of US government bonds.
The Dollar Index, which measures the strength of the US dollar against a basket of 6 other major currencies, closed on Friday with a slight decrease, at nearly 104.3 points. However, the index has increased nearly 0.2% this week and nearly 1% in the past month.
Also on Friday, the yield of 2-year US government bonds at times exceeded 4.7%, the highest since December. The yield on 10-year bonds jumped to 4.3% from the previous session’s threshold of 4.26%.
A report on the Producer Price Index (PPI) for January published by the US Department of Labor showed that in January, the inflation rate of goods at the factory gate was 0.3% compared to the previous month, instead of 0.1% as forecasted by economists in a survey by Dow Jones. Excluding food and energy prices, the core PPI increased by 0.5%, much higher than the forecasted increase of 0.1%.
Earlier, a report on the Consumer Price Index (CPI) published on Tuesday this week also showed a higher increase than expected. These data points raise concerns that the Fed will have to wait until the second half of this year to start cutting interest rates.
Gold is an asset that does not carry interest rates, so prospects of higher interest rates in the long run put pressure on gold prices. On Tuesday this week, the price of gold fell below the $2,000/ounce threshold for the first time since the beginning of the year, then re-established this important price level in the Thursday session. Although the upward trend of gold prices has been maintained in the Friday session despite the hotter-than-expected PPI data, analysts believe that gold prices will continue to encounter obstacles in the short term.
Senior analyst Everett Millman of Gainesville Coins said that because the possibility of Fed rate cuts in March is almost gone, gold prices will find it difficult to exceed the $2,000/ounce threshold. According to Mr. Millman, US economic growth is still strong, implying that inflation will slow down towards the Fed’s 2% target, and that will be a barrier to the price of precious metals.
“I expect gold prices to fall further, to the range of $1,960-1,970/ounce,” the expert said.
Recently, the market’s expectations of the time when the Fed can carry out the first round of rate cuts have been pushed back from March to June. Data from the CME exchange’s FedWatch Tool shows that traders are betting at a 73% chance that the Fed will cut rates in June.
Speaking on Thursday this week, Chairman of the Atlanta Fed branch, Raphael Bostic, said more time was needed to consider interest rate cuts.
Maintaining the trend of net selling gold, the world’s largest gold exchange traded fund (ETF), the SPDR Gold Trust, continued to sell off gold in the Friday session, with a net selling volume of about 1.1 tons of gold, reducing its holdings to over 837.9 tons of gold. This week, the fund sold more than 4 tons of gold, after selling 10 tons of gold last week.
In the domestic market this morning (17/2), Phu Quy Group listed SJC gold prices for the Hanoi market at 76.4 million VND/tael (buying) and 78.4 million VND/tael (selling).
Compared to the end of yesterday afternoon, SJC gold prices at this company have increased by 100,000 VND/tael at each price level. However, if compared to the early morning yesterday, SJC gold prices at Phu Quy have decreased by 500,000 VND/tael and 600,000 VND/tael, respectively.
Phu Quy’s smooth-round 999.9 mark gold rings are priced at 64.9 million VND/tael and 66 million VND/tael, respectively, an increase of 350,000 VND/tael and 250,000 VND/tael compared to yesterday morning.
In the Ho Chi Minh City market, SJC Company quoted gold prices for the same brand at 76.1 million VND/tael and 78.6 million VND/tael, respectively, decreasing by 700,000 VND/tael and 400,000 VND/tael compared to yesterday morning.
At these exchange rates, the spot gold price in the world market is equivalent to 59.9 million VND/tael, lower than the retail gold price of SJC gold pieces by about 18.5-18.7 million VND/tael and lower than the price of gold rings by about 6.1 million VND/tael.
