US stocks wobble, USD weakens, gold price ends 4 weeks of deep decline
Due to the volatility of many other investment channels plus the Fed’s monetary policy, investors’ cash flow into gold was not strong enough, the supply and demand in the gold market became unstable during the week, causing the gold price to fluctuate.
World gold price There were slight signs of recovery last week, ending a consecutive week of declines while falling to the lowest level in 3 months. The dollar continued to fall, US stocks witnessed a red week, supporting gold prices with a bounce.
Right from the first session of the week, gold price continued to decline from before, at $1,810.4 per ounce. The latest information from the Commodity Futures Trading Commission (CFCT – USA) has had a strong impact on the world gold price. Accordingly, the CFTC believes that gold investment funds have reduced their total long positions to 123,931 contracts, and increased selling by 958 contracts to 61,939 contracts.
Responding to this information, speculators quickly sold to recover capital, causing the world gold price to sometimes drop by $23/ounce, from $1,813/ounce to $1,790/ounce.
However, in the next slab, the price of gold turned to increase sharply, at one point reaching $1,836 per ounce. Gold price in the context of the US dollar falling against many other currencies, crude oil prices skyrocketing to $112/barrel, US bond interest rates fell from over 3%/year to 2.8%/year.
Another development, when the gold price fell deeply at 1,790 USD/ounce, many investors still believed that the gold market would prosper, so they bought massively, causing the buying power to increase. The price of precious metals therefore increased by 34 USD/ounce, from 1,790 USD/ounce to 1,824 USD/ounce, at one point in the session reached 1,836 USD/ounce.
However, the strong increase did not last long, gold price immediately reversed to go down. The reason was said by the Chairman of the US Federal Reserve (FED) – Mr. Jerome Powell – at an event of the US Federal Reserve The Wall Street Journal that the Fed will continue to tighten monetary policy by raising interest rates if inflation does not decrease.
The market predicts that the USD will appreciate strongly, which has a negative impact on the gold price. Many investors had a sell-off mentality to recover capital, leading to gold plummeting 20 USD/ounce to 1,816 USD/ounce.
After many days of struggling at low levels, in the early morning of May 20, gold price jumped sharply to $1,841.5/ounce, up $24.3/ounce compared to the previous morning.
In addition to the impact of the USD and the situation of the US stock market, the US economic recession is also a factor that investors are concerned about due to its influence on the gold price. In addition, the Russia-Ukraine war and the development of the Covid-19 epidemic in China closed major cities in the country, disrupting global trade.
Previously, the world gold market fluctuated strongly in the context of some financial institutions predicting that the US economic growth might decrease.
Specifically, investment bank Wells Fargo (USA) forecasts that US growth in 2022 will likely decrease from 2.2% to 1.5%. Another organization, S&P Global Ratings, also forecasts that the US will only grow 2.4% this year instead of 3.2% as previously predicted.
In addition, bond yields are also cause for favor of precious metals market. The US 10-year Treasury yield also slipped away from the 3% mark and stood at 2.837% at the end of this week. Meanwhile, the US stock market witnessed strong selling pressure and hit a 12-month low due to concerns that two US retail groups, Walmart and Target, would publish bad news about profits. They believe that inflation is the culprit that causes profits to fall.
Ending a volatile week, the world gold price increased by 1.8% during the week.
Ngoc Cuong
at Blogtuan.info – Source: vietnamnet.vn – Read the original article here
