Gold prices maintained their upward momentum in the trading session on June 16 after market sentiment continued to improve thanks to expectations that global energy supply would soon stabilize again, thereby easing inflationary pressure and interest rate prospects.
Spot gold prices fluctuated around 4,315 USD/ounce, after increasing by 2.2% in the previous session. The main driving force came from the decline of oil prices and the USD, helping the precious metal regain its appeal after weeks of pressure.
On the energy market, WTI oil remained around 81 USD/barrel after plunging nearly 5% in the first session of the week. Brent oil closed nearly 83 USD/barrel, reflecting expectations that supply pressure may improve in the near future.
In recent months, gold and oil prices have fluctuated in opposite directions. High energy prices have increased concerns about inflation, causing the market to continuously adjust expectations in the direction that central banks will maintain high interest rates for longer. This is a disadvantageous factor for gold because the precious metal does not bring yields.
Since the end of February, gold prices have remained about 18% lower than before the global energy market entered a period of strong volatility.
Ms. Nicky Shiels – Head of Metal Research and Strategy at MKS PAMP said that gold and silver are still being undervalued compared to market reactions in previous periods of major fluctuations.
Both gold and silver are currently undervalued. If the market environment continues to be more stable, investors can reduce selling pressure and return to see gold as a safe haven asset as well as a portfolio diversification tool," she said.
According to this expert, when inflationary pressure decreases and energy prices cool down, the market may gradually shift its focus from short-term factors to long-term drivers that are supporting gold.
Investors are currently focusing on watching a series of monetary policy meetings of major central banks this week, especially the meeting of the US Federal Reserve (Fed) under the direction of new Chairman Kevin Warsh.
Although gold prices have recovered strongly in the last two sessions, the market is still maintaining expectations that the Fed may raise interest rates by the end of the year if inflation does not decrease according to the target.
As of 8 am in Singapore, spot gold prices rose slightly by 1.01% to 4,319.38 USD/ounce. Silver prices fell 0.1% to 69.87 USD/ounce after rising nearly 3% in the previous session. Meanwhile, platinum and palladium prices both fell slightly. The Bloomberg Dollar Spot Index also weakened, contributing to supporting the recovery momentum of the precious metal group.
Many experts believe that in the short term, the direction of gold will continue to depend on interest rate expectations and the diễn biến of the USD. However, the need to diversify reserve assets, central bank gold buying activities and the role of risk hedging are still fundamental factors supporting the market in the long term.
