Gold prices skyrocketed to a two-month high of $1,845/ounce. Surprisingly, gold prices can still generate new profits in the context of major central banks showing a more Havy attitude and rising US Treasury yields.
"Treasury yields are being adjusted in line with inflation expectations. Typically, gold and yields fluctuate in a close relationship. If the real exchange rate increases, gold prices will fall," said Mr. Chris Weston - Head of Research at Pepperstone brokerage.
Gold does not pay interest. This is why when real yields increase, gold becomes less attractive. "The interesting thing is that since the beginning of the year, we have seen real exchange rates increase strongly but gold prices have remained at a good level," Weston analyzed.
Many experts believe that raising interest rates is unnecessary. Accordingly, the market is expected to increase interest rates three to four times this year amid the fear of record-high US inflation control from the Fed.
Gold is not an inflationary barrier at the moment, it is a barrier against unreasonable policy, Weston said. With the recent developments of gold prices, it is certain to continue to "fly high" if those policies are withdrawn".
Gold prices increased this week also thanks to a weakening stock market and strong fluctuations in cryptocurrencies. In addition, rising oil prices and rising retail demand have contributed to the increase in precious metal prices.
In addition, gold is continuing to create a series of higher support levels, showing that there is a good chance that the precious metal will soon reach the 1,850 USD/ounce mark.
Speaking to the press, Mr. Huynh Trung Khanh - Vice President of the Vietnam Gold Business Association - predicted that at the end of January and the beginning of February, domestic gold prices will increase. This is the time when some Asian countries such as Vietnam and China celebrate the Lunar New Year. Therefore, people tend to buy more gold.
Despite a slight decrease in the last session of the week, world gold prices are still anchored around the 2-month peak due to inflation and geopolitical risks supporting demand for safe-haven assets. Analysts said that gold is on the rise as investors are starting to pay more attention to the growing threat of inflation, increased fluctuations in the stock market and geopolitical instability as tensions between Ukraine, Russia and the US continue to heat up.
