USD rises sharply, investors sell off, next week gold risks falling deeply

At the end of the trading week, world gold price down 4%, the lowest drop since the middle of June 2021, currently around $ 1,800 / ounce, predicting the risk of gold facing a massive sell-off. Meanwhile, the recovery of the global stock market in the past week is also said to lead to a slide in gold prices

Precious metal prices also fell because of the pressure from the USD, which was increasing strongly this week due to the prospect of the US Federal Reserve (Fed) continuing to tighten interest rates. The US Dollar Index measures the greenback’s volatility with six major currencies (EUR, JPY, GBP, CAD, SEK, CHF) hitting a 2-decade high.

On May 13, Jerome Powell, Chairman of the US Federal Reserve (Fed) said that the US fight against inflation could face many great losses. The Fed chair’s hint made investors ready for a sharp rate hike next week.

A lot of money has fled from all markets, such as stocks, cryptocurrencies or gold, said Frank Cholly, an analyst at RJO Futures Fund.

In order to flee from the gold market to make up for what was lost in the recent US stock crisis, gold is expected to lose value quickly to 1,775 USD/ounce, equivalent to 49.8 million VND/tael.

Thus, according to Gold Price, with the sharp drop in the price of gold as it is today, those who invested in gold a year ago, if they still hold them, will suffer losses. Only investors, holding gold in the past month has suffered a loss of 153 USD/ounce, equivalent to 4.3 million VND/tael.

According to Fawad Razaqzada, market analyst at City Index, said that the Fed has introduced many policies to tighten inflation, causing money to seek safe-haven flows into the greenback, causing gold prices to continue to plummet.

“Gold hasn’t found any kind of support in times like now, when you’d expect haven demand to be strong. We’ve seen a lot of support broken out, which doesn’t encourage bulls. short-term traders,” added Razaqzada.

Jeffrey Halley, senior analyst at investment brokerage OANDA (USA), said that gold penetrated the level of 1,835 USD/ounce, along with other precious metal investors tending to sell, making gold continue to decline in the near future, possibly down to 1,780 USD/ounce.

The dollar rose to the highest level in 20 years due to concerns about tightening monetary policies to curb rising inflation, affecting the global economy. At that time, it is difficult for investors to find a safe hiding channel.

Fed Chairman Jerome Powell was voted unanimously by the US Senate to confirm his second term on May 12, the content of the vote has promoted the continued tightening of inflation. Members of the Senate have been actively supporting Jerome Powell after the Fed raised interest rates to 50 percentage points in early May, the highest increase since 2000.

Mr. Powell also affirmed that he will not raise interest rates to 75 points and the level of 50 points will be maintained in the coming June and July.

At present, anxiety continues to cover the market due to the impact of the protracted Russia-Ukraine conflict, the Covid-19 situation in China and rising global inflation. However, investors are paying more attention to the fluctuations of the USD, leading to a disadvantage in the gold market.

Ngoc Cuong

Eating a difference of nearly 20 million / tael: A confusing record of gold prices in VietnamThe domestic gold price still keeps a large gap with the world market. Although the market is quiet, experts are still optimistic that gold prices will increase in the coming time.