Vang SJC

Last Friday (24/7), Gold turned higher after sliding more than 1 percent to its lowest since early 2010, as the dollar fell from its highs and U.S. stocks extended losses, but the precious metal had the biggest weekly decline in prices since March.

Ending the session, gold prices closed at $1,098.63/ounce, up 0.75% from the open price ($1,090.37/ounce).

Currently, at 3:27 p.m. GMT+7, the price of gold is at $1,103.82/ounce.

Today, investors are awaiting the Fed’s next meeting in 28-29/7 for clues about the timing of rate hikes. However, according to many experts, the Fed statement will not have much changes compared to the June meeting, meaning that the institution will remain vague about its plan.

Today (27/7), gold prices are likely to fall under the impact of the following factors:

  • China’s stock market plunged. The Shanghai Composite Index fell 5.5%, recorded the biggest slide from 8 July. The Hang Seng China Enterprises fell 3.4% in Hong Kong. The main reason is that industrial profits fell 0.3 percent in June from a year earlier, after data Friday showed a private gauge of manufacturing dropping to a 15-month low. It showed that China’s economy is becoming worsen. Global commodity markets have also been affected, as China is one of the world’s biggest consumer. The slump in commodity prices pulls inflation down. Therefore, the appeal of gold fell sharply, because gold is always a “best friend” of inflation.
  • Tomorrow (28/7), Greece and international creditors will start the negotiation about the new bailout. Greek concerns have fade, so the appeal of gold as a safe-haven asset also decreased.
  • For the first time in history data since 2006, the hedge funds hold first ever net short position in gold. According to CFTC, the funds and other speculators shifted to a net-short position of 11,345 contracts in New York futures and options in the week ended July 21, Today, gold reserves in the SPDR Gold Trust continues to plunge to 680.15 tons, the lowest level since September 2008. The huge sell-off in the market shows that investors are extremely pessimistic about the prospects of precious metal.
  • Last week, although the dollar fell consecutively, gold still slipped, even when prices were relatively cheap. In overall, the negative sentiment is pervading, investors is anxiously waiting for breaking news before returning in the game.

However, gold prices also likely to rise as a result of several factors:

  • According to the latest figures, U.S. new home sales in June reached 482,000, down 6.8% compared to the same period last year and lower than forecast. This is also the lowest level since November 2014. Negative data sparked concerns about the recovery of the U.S. economy, thereby pulling down the dollar and support gold prices.
  • Greece worries have fade, giving the euro momentum, putting pressure on dollar, which may make the price of gold go up.
  • Gold demand may rise as gold prices are relatively cheap.

This evening, The U.S. will release Durable Goods Orders. Good data supports dollar, making negative impact on the gold prices, and vice versa.

Forecast:  Gold may go down toward $1,086/ounce.

Linh Nhan