Vang SJC

Yesterday (4/8), gold rose in early Europe session then fell after Fed Bank of Atlanta President Dennis Lockhart said the central bank is close to an increase and it would take a significant deterioration in the data not to move in September, lifting the dollar to a four-month high.

Ending the session, gold prices closed at $1,087.41/ounce, up almost 0.3% compared with the open price ($1,084.3/ounce).

Currently, at 3:16 p.m. GMT+7, the price of gold is $1,084.86/ounce.

  • The hottest news today will be the U.S. ADP non-farm payrolls. Although it is not the official statistics, but it also reflects the strength of the U.S. economy which can affect gold prices. U.S. labor market has made positive changes in recent months, so the data tonight may be good, supporting dollar and making negatively effects on gold prices.

In addition, there are several factors may pull gold prices down such as:

  • The statement of Fed Bank of Atlanta President Dennis Lockhart may put more pressure on gold prices. He is a vote member of FOMC, so his words can give make great influence on investors. Prospects of Fed’s rate hikes have made the gold market fall sharply for recent months, as gold doesn’t pay interest.
  • Currently, investors are cautiously awaiting the U.S. nonfarm payrolls later this weekend. These are important indicators to help find out the timing of Fed’s action. At this time, buying gold is quite risky.
  • U.S. Factory orders surged 1.8% in June thanks to demand for transport equipment and other goods, a positive sign for the industry. The good data could support the dollar and drag gold prices down.
  • China’s stock markets continues to plunge further, making a large amount of investment into dead capital, affecting cash flow into other assets.
  • Gold reserves in SPDR Gold Trust fell to 670.62 tonnes from 672.7 tonnes yesterday, making its new record low since March 2008, a sign that investors are running away from the precious metal.
  • The rally in gold prices yesterday may create momentum for a new sell-off on the precious metal market, as investors still remain worries.

However, gold prices may increase due to:

  • Gold demand may rise on “cheap” gold.
  • Greece crisis: Greece’s government aims to reach agreement with creditors on a new bailout within the next two weeks, enabling it to make a 3.2 billion-euro ($3.5 billion) payment to the European Central Bank without further bridge financing. Greece situation is changing positive, it may support the euro and put pressure on the dollar, which can help gold rally.
  • The slide on global commodity markets is creating concerns about deflation. However, according to some analysts, the risk of deflation could keep the U.S. Federal Reserve from raising interest rates, at least in September, thereby supporting gold prices in the short term.

Forecast: Gold price may rise to $1,090/ounce, then go down toward $1,078/ounce.

Linh Nhan