Why did gold jump to 69 million VND/tael?

Updated at 9am this morning (March 26), the enterprise Majority in Hanoi traded SJC gold bars at 68.6 – 69.37 million dong/tael, up 50,000 dong/tael in the buying afternoon and 100,000 dong/tael in selling compared to yesterday (March 25).

In Ho Chi Minh City, the purchasing price is similar to Hanoi, the selling price is 69.35 million VND/tael, an increase of 50,000 VND/tael in the buying direction and 100,000 VND/tael in sales. The difference between buying and selling fluctuates from 750,000 to 770,000 VND/tael.

At 7am this morning (March 26), the spot gold price on Kitco was $1,958/ounce, equivalent to VND54.06 million/tael. Converted at the free USD exchange rate without taxes, world gold is cheaper than domestic by 15.21 million dong/tael.

Many experts forecast, gold could hit $2,000/ounce next week because the US Federal Reserve (Fed) signaled an increase of 50 basis points in the next interest rate adjustment period. Yesterday afternoon (March 25), the 10-year US Treasury bond yield increased by 2,503 percent, the highest level since May 2019, while gold at one point traded at $1,957 per ounce.

“High yields will create many negative impacts on gold, but at the moment, everything is different. Gold is still a hedge, a safe haven for investors when inflation increases,” said Nicky. Shiels from MKS PAMP said.

Many people are concerned about an inversion of the yield curve when looking at the spread between the two-year and 10-year Treasury yields, said Shiels. “The inverted yield curve predicts a recession coming. When that time, gold will approach the price of $ 2,000 / ounce,” the expert said.

Currently, there is a lot of opinion around whether an inverted yield curve is a sign of a recession. But before that, the yield curve inverted in 2019 before the economy fell into a recession due to the Covid-19 epidemic. In 2007, the yield curve also inverted before the crisis finance worldwide in 2008.

In addition, the topic of what the Fed will do to protect the US financial system in the context of rising inflation is also of interest to experts. If according to plan, the Fed will raise interest rates 7 times in 2022. Therefore, the basic interest rate in the US at the end of 2022 will increase to 1.9% and reach 2.8% by the end of 2023.

Explaining the above decision, 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.