Gold returns to the bull race because of these 2 factors

Yesterday afternoon (March 24), the enterprise SJC gold bar traded at 68.2 – 68.92 million VND/tael, an increase of 100,000 VND/tael each way compared to the previous day. The difference between buying and selling is 720,000 VND/tael.

At 7 a.m. this morning (March 25), gold price spot on Kitco was 1,959 USD/ounce (equivalent to 54.1 million VND/tael), up 17 USD compared to the 24/3 session. Converted at the free USD exchange rate excluding taxes and fees, world gold is cheaper than domestic by 14.82 million dong/tael.

Gold is returning to the bull race as the war in Ukraine remains tense and escalated. Expert Chantelle Schieven from Murenbeeld predicts, gold will shine in the near future when it hits $2,000 per ounce because the conflict between Russia and Ukraine has entered its fifth week without “cooling down”. Therefore, investors flocked to find gold as a safe haven.

“The war in Ukraine is changing the political landscape and dominating the market finance Global. Therefore, the fear of investors will not disappear soon, but is likely to increase, even if the geopolitical situation cools down, gold will still hold the $ 1,900 / ounce mark,” Chantelle said.

In addition, the expert also pointed out that another factor affecting the market is inflation. Although inflation is forecast to increase in 2022, she does not expect the US Federal Reserve (Fed) to take drastic measures because the Fed is stuck in a money dilemma. “The Fed is having a headache with debts, if higher interest rates will prevent the economy from recovering from the pandemic,” the expert said.

In the same opinion, UOB bank (Singapore) forecasts that gold still has a lot of room to increase in price when inflation increases rapidly. According to research by UOB, people are tending to allocate more investment portfolio to gold. According to the bank, the gold price will trade at $2,100/ounce in the second quarter, reach $2,150/ounce in the third quarter and reach $2,200 in the fourth quarter.

Contrary to the above view, Fed Chairman Jerome Powell said that the Fed’s tough measures are a hedge against inflation because high inflation will threaten the US economic recovery after the Covid-19 pandemic.

“The labor market is very strong and inflation is too high, so the Fed will take all measures to keep prices stable. Most likely, raising interest rates at each meeting needs to be stronger than zero. 25%”, the Fed Chairman analyzed.

This statement was made by Mr. Powell less than a week after the Fed raised the federal funds rate by 0.25%. The interest rate increase was made after 3 years the US lowered interest rates to nearly 0%.

Previously, the Fed also signaled that there will be 6 more rate hikes. If according to the schedule, the basic interest rate in the US at the end of 2022 will increase to 1.9% and reach the milestone of 2.8% by the end of 2023.