Gold price adjusts after weekly strong increase
Early in the morning of September 21, world gold prices turned down after a volatile trading week. As of 7:50 am (Vietnam time), spot gold prices decreased by 0.27%, to 4,366 USD/ounce.
The adjustment move took place after the precious metal just experienced a week of strong recovery. Previously, gold prices were at times under great selling pressure as the market worried about rising oil prices, US bond yields approached the 5% threshold, and the US Federal Reserve (Fed) maintained a cautious view on interest rates.
However, after the monetary policy decision was announced, selling pressure gradually cooled down. Oil prices fell again, the USD weakened and US Treasury bond yields left the peak, creating conditions for gold to recover.
In the last session of last week, spot gold prices at one point approached the 4,400 USD/ounce zone, before closing around 4,377 USD/ounce. For the whole week, the precious metal still recorded an increase, ending a three-week consecutive decline.
Interest rate pressure is still an obstacle
The slight decrease in gold prices in the first session of the week is considered a correction after a rapid increase, instead of a clear reversal signal.
Currently, the market is still struggling between two groups of factors. One is the expectation of inflation cooling down as energy prices fall, supporting demand for gold. The other is pressure from monetary policy as US bond yields remain high.
After the latest policy meeting, the Fed raised interest rates by another 0.25 percentage points, bringing the target interest rate margin to 3.75-4%. Updated forecasts show that most Fed officials are still open to the possibility of another interest rate hike before the end of the year.
The yield on 10-year US Treasury bonds has returned to around 5%, while the USD is showing signs of strengthening. These are factors that often put pressure on gold due to reducing the attractiveness of non-performing assets.
However, geopolitical risks are still creating momentum for gold prices. Developments related to tensions in the Middle East, especially issues surrounding energy transportation through the Strait of Hormuz, continue to make investors maintain defensive needs.
New week prospects are still positively assessed
The latest gold price trend survey by a precious metals website shows that market sentiment still leans towards the scenario of price increase.
In the group of Wall Street experts participating in the survey, all 16 people predicted that gold prices could continue to rise this week. Meanwhile, an online survey of 220 individual investors showed that 58% expected gold prices to increase, 24% predicted a decrease and 19% thought prices would remain flat.
Although positive sentiment prevails, the market still needs to monitor US economic data this week. New indicators on manufacturing activity, labor markets and consumer sentiment may affect expectations about the Fed's interest rate path, thereby directly impacting gold prices.
Technically, the 4:396-4:405 USD/ounce zone is being considered an important area to confirm the possibility of continuing to expand the upward momentum. Conversely, if selling pressure increases, the support zone around 4.331 USD/ounce will be the area to be monitored.
Thus, the decrease in gold prices in the first morning session of the week has not created a worrying signal. The market is still in a reaction phase to changes in interest rates, USD, bond yields and geopolitical factors. Investors need to monitor more new data before assessing the next trend.
The article only updates the developments of the gold market and factors affecting precious metal prices, not investment recommendations.
