World gold price recorded a second consecutive week of increasing
Meanwhile, concerns about tightening US Federal Reserve (FED) monetary policy has also softened somewhat.
Gold went up in the first two trading sessions of this week (May 23-24), marking the fifth consecutive price increase since last week and touching a two-week high.
The dollar fell to a one-month low, while 10-year US Treasury yields also fell as the “red color” in the stock market revived safe-haven demand.
Gold traders are increasingly skeptical of the Fed’s readiness to respond to a recession amid growing economic concerns, analysts at investment bank TD Securities (Canada) said. The increase is “energizing” the gold market.
This precious metal was originally considered a safe investment channel during the economic crisis and to deal with inflation, but rising interest rates will affect this unprofitable precious metal.
According to the president of the Atlanta Fed branch, Raphael Bostic, if the Fed proceeds to raise interest rates by 0.5 percentage points in June and July 2022 as Fed Chairman Jerome Powell has signaled, then the pause in interest rate hikes will be. capacity at the meeting in September 2022 is reasonable.
Meanwhile, David Meger, gold trading director of High Ridge Futures financial institution (USA), said that the market is still skeptical whether the interest rate increase will be enough to prevent inflation pressure in the short term or not. .
However, the rally of gold was stopped on May 25 and continued to ease slightly on May 26, when the Fed’s plan to tighten monetary policy strongly made the precious metal less attractive to investors. investment, along with increased pressure from the stock market’s recovery.
While gold is considered a safe investment in times of uncertainty, it is also very sensitive to rising US interest rates. The reason is that high interest rates increase the opportunity cost of owning a non-yielding asset like gold.
By the last session of the week on May 27, the gold price reversed to go up. At the end of this session, spot gold price increased 0.1% to $1,852.22 per ounce, thereby recording a 0.4% gain for the whole week. While the price of gold futures delivery increased 0.2%, to 1,851.3 USD/ounce.
“The Fed is sticking to its stance to some extent, but there is still uncertainty about what to expect after the two rate hikes,” said Daniel Pavillonis, senior market strategist at RJO Futures. last rate.”
U.S. 10-year yields fell on Tuesday, following a brief rally on the back of strong spending data. Meanwhile, the USD headed for the second consecutive week of decline.
Minutes of the Fed’s May 3-4 policy meeting released on May 25 showed that the Fed was struggling to navigate the economy in the direction of “cooling down” inflation without causing a recession. .
Rupert Rowling, market analyst at Kinesis Money, said: “Gold looks to have found its true price and is likely to hover around $1,840-$1,860 an ounce until a new catalyst emerges. “.
Also in the last session of the week, spot silver price increased 0.2% to 22.04 USD/ounce, establishing a gain of 1.4% for the week. Palladium rose 2.3% to $2,060.36 an ounce, posting a 4.8% gain for the week, its highest since early April. Platinum rose 0.1% to $950.59 an ounce.
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