Vang SJC

Yesterday (1/7), gold continued to go down under the strength of the dollar and prospects for progress in the Greek crisis, after the country announced that it would accept proposals of the creditors, if some conditions were changed.

During the session, the price hit a low of $1.167.41/ounce, then closed at $1,168.66/ounce, down 0.3% compared with the open price ($1,172.54/ounce).

Currently, at 3: 54 p.m. GMT + 7, the price of gold is at $1,165.39/ounce.

  • Tonight, at 7:30 p.m. GMT+7, the U.S. will release a series of economic data, including non-farm payroll.

Since early 2015, the U.S. labor market have had positive changes, non-farm figures has always reached over 200,000. Yesterday, ADP non-farm report showed 237 000 jobs had been created in the private sector in June, the highest level since December, exceeding forecast 218,000. In May, the number of new jobs reached 280,000, a record high level since January 2015. Non-farm data in June will be 233,000, according to a Bloomberg survey.

  • Therefore, tonight figures likely remain above 200,000, supporting dollar and dragging gold prices go down.

In addition, there are several factors that can negatively impact the gold prices:

  • Greek crisis: The market is awaiting the result of the referendum in Sunday (5/7). Currently, the Greek people tend to vote “yes”, therefore, the negotiations likely to be continued, raising hopes for Greece. Now, the appeal of gold as a safe haven asset has cooled off.
  • Gold prices seem not to react to Greek crisis in recent days. It may be due to the growth of the European economy, the Greek debt crisis will have an small impact in the short term. Recently, Standard and Poor’s has raised growth forecast for the Euro zone. Yesterday, Frederic Oudea, CEO of Societe Generale SA said that the ECB could handle the “messy Greece” with QE and the European economy has become stronger than when the issue flared up five years ago.
  • The U.S. economy is making positive changes, leaving the Fed on track for rate hike later this year. The dollar has strengthen in recent months, putting pressure on the gold market.
  • U.S. stocks rallied , attracting capital inflows.

However, gold prices is likely to rise again, there are a number of reasons:

  • China’s stock market plunged to the lowest in three months. The Shanghai Composite Index slid 25% since reaching the highest on 12 June. Now, many investors may turn to other safer assets like gold.
  • After the sharp decrease in gold prices in recent days, many investors tend to close sell orders to take profits, while others will buy when prices are low, prices may go up in short term.
  • If Greek crisis goes much worsen, gold prices may rise in short term.

Forecast: Gold prices is likely to go down, towards $1,150/ounce.

Linh Nhan