Reuters said that the world gold price recorded at 5:00 a.m. on January 24, Vietnam time at 2,746.4 USD/ounce was the result of a weakening USD and concerns surrounding the economic policies of US President Donald Trump, especially the risk of a trade war.
President Donald Trump said his administration is discussing a 10% tariff on goods imported from China on January 1 - the same day he had previously said Mexico and Canada could face a tariff of about 25%.
Gold is often considered a safe haven during times of economic and geopolitical instability, but the policies proposed by President Trump are likely to force the US Federal Reserve (Fed) to maintain high interest rates for a long time to curb rising price pressure.
Gold prices have risen 30% in 2024 alone. According to Forbes, gold prices increased rapidly due to many important reasons.
The first is geopolitical instability. Tensions between superpowers such as the US, China and Russia have increased concerns about market instability, causing investors to rush to gold - a safe-haven asset.
Second is inflation concerns. Highly inflationary policies, including Mr. Trump's tariff proposal, make gold an effective means of preserving asset value.
Third is that central banks increase gold reserves, boosting demand and prices.
Fourth is the flexible monetary policy. Expectations that the US Federal Reserve will slow down interest rate increases or cut interest rates in the future make gold more attractive.
Can gold prices fall by 30%? Forbes said that although gold prices are booming, the risk of a sharp decline still exists. History has seen gold prices fall nearly 45% from 1,920 USD/ounce in 2011 to 1,050 USD/ounce in 2015 due to the strengthening of the USD and rising interest rates.
Forbes points out scenarios that could cause gold prices to fall by 30%, including: Fed's tough interest rate policy. If the Fed raises interest rates quickly and strongly, the USD will increase in value, putting strong downward pressure on gold prices.
Gold supply spikes: If major gold mines are discovered or central banks sell off gold reserves, increased supply will cause gold prices to plummet.
Global economic stability: If the economy recovers strongly and geopolitical tensions are resolved, demand for gold will decrease.
Competition from other assets: cryptocurrency and other investment channels could drain cash flow away from gold, reducing the value of the precious metal.
Although the possibility of gold prices falling by 30% is not impossible, this scenario only happens if many factors change strongly at the same time. Experts predict that if gold prices fall, they will fall slowly instead of suddenly.
In the current context, uncertainty about President Donald Trump's economic policies, especially the taxation of imports, along with potential inflation, is still the main driver to help gold maintain heat in the market.
