Gold price is affected by the strength of the USD and the expectation that the USD base interest rate will be adjusted up.
Closing the session, spot gold price rose 0.2 percent to $1,744.47 per ounce, earlier in the week the gold price fell to a nine-month low. Gold futures contract prices rose 0.2 percent to $1,742.6 an ounce.
Recently, gold has lost its position as an asset that attracts cash flow and is looking for a safe place to invest despite the risk of an escalating economic recession, investors instead choose the USD. The dollar has now appreciated to a two-decade high on expectations that the Fed will raise the basic interest rate on the dollar.
The possibility that the Fed will raise interest rates by 75 basis points has attracted the attention of investors after the latest data on the US job market was released, job growth in the US was higher than expected. Unemployment is now close to pre-COVID-19 lows.
Senior market strategist at RJO Futures, Mr. Bob Haberkorn, commented: “The latest jobs data has pushed gold prices down, gold prices struggled after a period of strong USD. However, the price of gold is supported by many investors looking for opportunities to buy cheap gold.
In its mid-year report released, the World Gold Council (WGC) stated that gold, given its strategic role as a hedging asset, will remain high in the second half of the year, particularly in the second half of the year. considering the instability factors.
From a technical perspective, the gold price falling below the threshold of $1,760/ounce can be seen as an indicator of the possibility that gold will continue to fall below $1,720/ounce and possibly to a low of $1,680. /ounce was set in 2021, said Michael Hewson, head of market strategy at CMC Markets.
“There are too many factors pushing gold prices up, so gold prices are still trading in a narrow range,” said Daniel Ghali, commodity strategist at TD Securitie.
Also according to Mr. Ghali, the market is currently facing the risk of an economic recession as well as the possibility of a slowdown in global growth causing money to increase in gold, in other words, the market has the Fed’s commitment to In the face of inflation, this fact causes real interest rates to rise.
Gold is traditionally seen as a hedge against inflation, but higher interest rates increase the opportunity cost of holding it.
“We think gold will have some insignificant gains in the second half of this year, most likely to hit $ 1,900 / ounce,” said Commerzbank expert Carsten Fritsch.
In the short term, however, the Fed will raise interest rates strongly, gold prices will be under a lot of pressure.
In the physical gold market, many gold traders are lowering the price of gold products to attract buyers as the wedding season in India is gradually ending, at the same time, some consumers in China are buying gold in the near future. context of growing economic worries.
Currently, increased recession risks are preventing investors from selling gold, however, the price of gold will move in line with the movement of real interest rates for the rest of 2022, so the price of gold will under downward pressure, analysts at Standard Chartered Bank wrote in a recent study.
Source: CafeF
Source: Vietnam Insider