World gold prices continued to fall in the trading session on August 31, as the market was still affected by tough signals about US monetary policy. Investors are increasing the possibility that the US Federal Reserve (Fed) will raise interest rates in September, thereby putting pressure on the precious metal.
As of 2:18 PM Vietnam time, spot gold price decreased by 0.39%, to 4,437.50 USD/ounce. December gold futures price decreased by 0.91%, to 4,488.74 USD/ounce.
Previously, in the session on August 28, December gold futures fell $143.1, or 2.9%, to $4,529.9/ounce. This is a sharp decrease after Fed Chairman Kevin Warsh issued messages showing that the US central bank cannot be subjective about inflation.
The market quickly adjusted policy expectations. CME Group's tracking tool showed that the probability of the Fed raising interest rates in September increased to 58%, from 36% before Mr. Warsh's statement.
High interest rates often reduce the attractiveness of gold because the precious metal does not generate income from interest rates. As US bond yields rise, the opportunity cost of holding gold is also higher. The strengthening USD also adds pressure as it makes gold more expensive for investors holding other currencies.
However, the outlook for gold prices has not completely turned negative. Independent analyst Tai Wong said that the possibility of the Fed raising interest rates in September is still uncertain and tough statements can be seen as a message to maintain pressure on inflation expectations.
According to Mr. Wong, the market still needs more data to determine whether US inflation is really returning to the 2% target of the Fed.
In his speech, Mr. Warsh emphasized that the Fed cannot be satisfied if core inflation does not show a clear trend towards the 2% target. He said that if the data does not show clear progress, the Fed will have to act.
This development disrupted the upward momentum of gold in August. Gold prices once reached 4,696.18 USD/ounce last week, the highest level in more than 3 months, before turning down sharply.
On the precious metals market, the spot price of silver is currently up 0.52%, to 66.73 USD/ounce. Platinum prices decreased 0.91%, to 1,806.57 USD/ounce, while palladium decreased 1.38%, to 1,427 USD/ounce.
In the short term, the diễn biến of the USD, US bond yields and inflation data will continue to determine the direction of gold prices. After a strong correction from the near 4,700 USD/ounce zone, whether the price can hold the 4,400 USD/ounce zone or not will be an important signal for the next trend.
