Vang SJC

Yesterday (2/7), gold weakened for 4 days continuously, despite the non-farm report was not as good as expected. However, the numbers remained high, reinforcing speculation of a rate hike later in the year.

During the session, gold prices hit a low of $1,156.65/ounce, then rebounded after U.S. jobs data. The price closed at $1,165.97/ounce, down 0.2% compared with the open price ($1,168.42/ounce).

Currently, at 3:59 p.m. GMT + 7, the price of gold is at $1,168.59/ounce.

Today, gold price may go down under the impact of the following factors:

  • 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.
  • The dollar has strengthen in recent months, putting pressure on the gold market. Yesterday, U.S. nonfarm payrolls showed 223,000 jobs had been created in June, lower than expectations (231,000), wage growth fell from 0.2% to 0%. However, the unemployment rate was 5.3%, as expected by the Fed. According to a poll by Reuters after the U.S. data, the Wall Street banks still target September for the Federal Reserve to raise interest rates for the first time in nearly a decade.
  • Despite poor U.S. data, gold failed to make an “amazing” rise. It seems that investors are not optimistic about the precious metal’s prospects.
  • The euro is under pressure not only by Greece’s debt crisis but mainly due to the ECB’s QE package. The dollar will be supported from a weak Euro, putting pressure on gold prices.
  • The leading economies in Asia like China, Japan are still on slow recovery in recent months, despite the application of easing measures. Low inflation rates in all over the world puts pressure on the gold market, as gold always companions with inflation.
  • The gold market may not have much volatility in Friday, when the United States is in bank holiday and investors are cautious before the referendum in Greece.

However, gold can also go up, there are several reasons:

  • Greek crisis: If the Greeks vote “No”, this could be a shock to the global financial markets, pushing demand for safe haven assets like gold in the short term.
  • Yesterday, gold prices touched the lowest in nearly 2 months. Low prices likely pushed up demand. In China, stocks go down sharply, though the government has relaxed the margin trading rules. Now, many investors may turn to other assets like gold.
  • Additionally, in China and India, demand for physical gold may rise while gold prices are relatively cheap.

Forecast: Gold prices is likely to go down, towards $1,158/ounce.

Linh Nhan