Vang SJC

Today (29th May), gold price continue continue its modest gains, while dollar weakens. Currently, gold is traded at $1,188.13/ounce.

Today, gold price is likely to fall due to the impact from the following factors:

  • Gold demand declines across Asia this week, particularly in India as the wedding season has passed and there are no major festivals. Today Swiss announced that in April, exports of gold to India went down 28% from March.
  • National Commodity and Derivative Exchange (NCDEX) in India has launched online gold trading floor called “Gold Now”. Products on the floor includes imported gold and domestic gold which is turn into bar and bullion. This action aims to reduce government’s dependence on gold imports. The decline in India’s gold demand may negatively impact the gold price.
  • China’s net gold imports from Hong Kong fell to the lowest level in the past 8 months, plunged by 52,204 tons to 66,363 tons compared to the previous month. The amount of gold imported from Switzerland also slipped to 15.1 tons. Demand for precious metals stalled because of the significant growth of the stock market. China is now the largest consumer of gold in the world, the decline in the demand here may adversely impact the gold price.
  • The experts noted that the US’s slow growth in the first 3 months is only transitory because of harsh winter. In QII 2015, the economy is showing sign of recovery, strengthening prospects of Fed’s rate hike. The central’s bank move will hurt gold demand.

However, gold prices may also go up, while being supported by a number of news:

  • M3 money supply in the euro zone reached 5.3% in April, up from 4.6% of the previous month and higher than the forecast of economists which was 4.9%. This could be a sign of inflation in the future in this area, when the ECB recently announced that it would accelerate the pace QE. When inflation goes up, gold becomes more attractive because it is considered as one tool against inflation
  • An euro zone’s official said, Greece will not receive aid if the country refuse creditors’ demand before the end of next week. Today, European stocks also stalled amid concerns over the Greek problem. Today, IMF managing director, Christine Lagarde, told German newspapers that there is possibility of Greece leaving the Eurozone. Now many investors will look to gold as a safe heave amid uncertainty.

Today, the US will release preliminary GDP figures which may affect gold price in short-term.

Forecasting: Gold price is likely to decline.

Hanh Nguyen