The world gold price mostly went up in the last trading sessions of the past week, amid the context of investors looking to this safe asset amid concerns regarding an economic recession, following the rise of the dollar and profits. Bond yields pushed gold prices to a one-month low.
However, the market is still watching the comments from the Chairman U.S. Federal Reserve (Fed) Jerome Powell on the outlook for interest rate policy.
Gold continuously increased in price in the first three trading sessions of this week (February 6-8), following falling more than 2% at the end of last week, due to data showing the pace of job creation in Vietnam. US economy increased sharply in February 1, 2023.
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Concerns regarding an economic slowdown remain and are likely to support gold demand this year, according to analysts.
Phillip Streible, market strategist at financial services firm Blue Line Futures in Chicago (USA), said that traders see gold as a safe-haven asset and proceed to buy this metal.
In a speech on February 7, Mr. Powell said that the latest US jobs report shows that bringing inflation back near the 2% target will take “quite a long time,” noting that the Fed needs to interest rates should be higher.
Also on February 7, Minneapolis Fed President Neel Kashkari said the US central bank would probably have to raise interest rates to at least 5.4% to curb high inflation.
After Mr. Powell’s speech, the dollar slipped from a one-month high and helped gold prices rise.
Gold price is always sensitive to US interest rate adjustments, because rising interest rates will help USD strengthens, but reduces the attractiveness of non-yielding assets such as gold significantly.
Analysts at Commerzbank now forecast gold price will be at $1,850/ounce by the middle of the year and $1,950/ounce by the end of 2023.
Following the strong US jobs report, traders are waiting for January 2023 inflation figures to be released next week for more signals on the Fed’s path to rate hikes.
Rupert Rowling, an analyst at trading platform Kinesis Money, said that gold prices are still supported by buying activity by central banks in countries such as China, India and Turkey.
The only “dark spot” of the gold market this week is the 9/2 session. Gold prices turned lower on profit-taking following the precious metal failed to sustain above $1,900 an ounce.
On the same day, Fed Governor Christopher Waller in a speech at Arkansas State University on February 8 said that the Fed needs to prepare for a longer fight once morest inflation and interest rates need to be maintained at high levels.
Gold reversed upward in the last session of the week (February 10), while the market awaited US inflation data in anticipation that it might affect the Fed’s monetary policy trajectory.
At the end of this session, spot gold price increased 0.2% to 1,864.10 USD/ounce. Meanwhile, the US price of gold futures for delivery in February 2023 fell 0.2 percent to $1,874.50 per ounce.
The US consumer price index following adjustment increased 0.1% in December 2022, instead of falling 0.1% as reported last month.
“We will have to see significant and sustained progress on the inflation front before authorities feel comfortable,” said Bart Melek, head of commodity market strategy at TD Securities. while allowing interest rates to be lowered.”
The dollar index headed for a 0.7% gain over the past week. Additionally, benchmark yields hit their highest levels in more than a month.
The crypto market now expects the top of the Fed’s current interest rate cycle to be around 5.15% in July of this year.
“Next week’s US CPI report might play an important role in the direction of gold prices in the near-term,” said Michael Hewson, Head of Market Analysis at CMC Markets.
Also in the session, spot silver rose 0.3 percent to $22.05 an ounce, but headed for a fourth straight weekly loss, while palladium fell 5.4 percent to $1,541.05 an ounce. Platinum fell 0.9 percent to $945.42 an ounce and posted its fifth consecutive weekly decline.
Minh Trang (VNA/Vietnam+)