Vang SJC

Ending the session yesterday (26/1) , the gold has moved upwards to the 3-month high as investors awaited for the first meeting of the new year of Federal Open Market Committee (FOMC) which is due to begin today. The gold moved between $1,106.87 and $1,122.73/oz, before setting at $1,119.54/oz, up 1.08% from the open price $1,107.71/oz.

The Fed is widely expected to put the interest rate increase on hold after raising the rate for the first time in nearly a decade in December FOMC policy meeting. The probabilities for a rate hike in March are below 30% and those for June are just roughly 50%, according to analysists. The US economy has prone to some problems from the global growth and the market turbulence in equities, which triggered worries about the overall economy health. Investors make certain that there will be no change in the benchmark rate for this meeting and look to the Fed policy statement for any indication about whether the US central bank will consider slowing the path of tightening policy this year and how many times the rate lift will be. The inflation outlook is also seen as the obstacle for the Fed officials due to the falling oil prices. The less positive prospects for a rate hike appear to be a good thing for the precious. Dollar has been depreciated against the basket of other major currencies as investor await the outcome of the Federal Reserve’s first policy meeting of the year. The softer dollar has supported the precious gold as a replacement, kicking off the gold so far.

Last session, the global financial market has been in-red ahead of the Fed’s policy statement, amid the global economic headwinds from China to Wall street. The accelerating net capital outflow in China combined with the slowdown of Chinese economy has dragged the CSI 300 down by roughly 6% yesterday, following by the vulnerable market sentiment. The falling oil price led the downtrend into the US major indices as the American Petroleum Institute (API) late Tuesday (26/1) reported that the crude oil supplies climbed by 11.4 million barrels for the week ended 22 January, which is supposed to put a heavy stress on the energy price. Both Nasdaq and Down Jones index gave a decrease, therefore, gold is considered as an alternative asset in the case of global economic uncertainty. The demand for a refuge from the financial risk is becoming much greater which boosts the price of gold.

In addition, the physical gold demand also supports the gold price when China’s net gold imports for December in the mainland Hong Kong surged to the highest in more than two years, as the data showed, resulting from the fact that investors have lost faith in collapsing stock markets and in turn seek for the safe-haven assets such as gold.

Analyses of Group Fiinvesting


Linh Nhan