Vang SJC

Yesterday (30/7), gold prices continue to go down due to the prospects of Fed’s rate hikes. Ending the session, gold prices closed at $1,088.57/ounce, down nearly 0.8% compared with the open price ($1,096.82/ounce).

Currently, at 2:00 p.m. GMT+7, the price of gold is $1,081.87/ounce.

  • Today (31/7), there are number of negative factors that may pull gold down such as: The U.S.’s GDP rose at a 2.3% annual rate from April to June. The latest reading on GDP was propelled by higher consumer spending on big-ticket items such as new cars and trucks and the strongest housing market in years. This news open the door for Fed to raise interest rates in September, putting pressure on gold prices.
  • ANZ becomes more pessimistic about the prospects of the precious metal. This institution said that, the gold market seemed more bearish than 2013. ANZ expects the gold price to average $1060/oz this quarter, down 3.6% on the previous estimate of $1100/oz, and $1020/oz in the December quarter, down from $1125/oz.
  • Gold demand in the world’s largest consumers like China and India do not prosper, “ignoring” the attractive price. Moreover, the Chinese stock market continues to plunge, in some measures, blocking cash flows pouring into other assets.
  • Pessimism still surrounds the gold market. The possibility of Fed’s rate hikes is still around the corner. It seems that investors is anxiously waiting for breaking news before returning in the game. Commodity markets continue to slide sharply. In July, the Bloomberg Commodity index slid 9.8%, recorded the largest decline since September 2011.
  • The slump in commodity prices is sparking fears of deflation, making negative impact on gold demand, as gold is often regarded as a hedging instrument against inflation.

However, gold price may still go up due to the following reasons:

  • Greece issues: Recently, the  Executive Board of the International Monetary Fund (IMF) announced that with huge debts and poor reform implementation, Greece is not qualified to receive 3rd bailout package from the IMF. Meanwhile, in Greece, the left-wing Syriza party is opposing Prime Minister Tsipras’ reforms. Internal conflict may harm the negotiation.
  • Gold demand may rise as gold price is at a low.

Forecast: Gold prices are likely to fall to $1.076/ounce.

Hanh Nguyen