Inflation heats up, bond yields put pressure on gold
Recorded at 5:40 AM on September 11 (Vietnam time), world gold prices were listed around 4,314.8 USD/ounce, a sharp decrease compared to the previous 4,400 USD/ounce range. Silver prices also faced great selling pressure, falling to 63.3 USD/ounce. Meanwhile, platinum prices fell to 1,767 USD/ounce and palladium to 1,262 USD/ounce.
The deep decline in precious metals takes place in the context of the global financial market being affected by a series of new signals about inflation and monetary policy.
One of the factors causing gold weakness is that production inflation data in the US increased higher than forecast. The producer price index (PPI) in August increased by 0.4% compared to the previous month and increased by 5.4% compared to the same period last year, mainly due to strong increases in energy and fuel costs.
This figure increases concerns that inflation has not completely cooled down, while further strengthening expectations of the US Federal Reserve (Fed) maintaining a tight monetary policy.
On the financial market, the yield of 10-year US Treasury bonds increased to around 4.94%, the highest level since October 2023. Increased yields make gold less attractive because precious metals do not generate cash flow like bonds.
In addition, the USD also recovered after new economic data, creating more pressure on gold prices. As the greenback strengthens, gold often becomes more expensive for investors holding other currencies.
According to market developments, interest rate futures are reflecting the possibility that the Fed will continue to raise interest rates in the mid-September meeting. This makes investors more cautious about non-performing assets such as gold.
Oil prices rise sharply, gold no longer benefits from safe-haven demand
Notably, although geopolitical tensions in the Middle East region continue to increase, gold still cannot maintain its upward momentum like in previous periods.
The reason is that cash flow in the market is currently more focused on the impact of oil prices and inflation instead of safe-haven demand.
Crude oil prices rose sharply as risks related to the transportation route through the Strait of Hormuz and the Red Sea region increased. WTI oil rose to over 102 USD/barrel, while Brent oil surpassed 107 USD/barrel.
The fact that oil prices exceeded the threshold of 100 USD/barrel raises the risk that energy costs will continue to drive global inflation. This makes the market worried that central banks may have to maintain high interest rates for longer.
With gold, this is a disadvantageous scenario when the precious metal is both under pressure from rising bond yields and facing difficulties in attracting defensive cash flow.
Gold faces important support zone
Technically, gold prices have broken through the reference zone around the 200-day average at 4.341 USD/ounce and are testing the support zone near 4.315 USD/ounce.
If selling pressure continues to be maintained, gold prices may head towards lower support zones around 4,290 USD/ounce and 4,263 USD/ounce.
In the opposite direction, to regain the upward trend, gold needs to overcome the resistance zone of 4,379 USD/ounce. If successful, the precious metal may return to the 4,396 USD/ounce area and further to the 4,500 USD/ounce mark.
For silver, the decrease is stronger when losing important support zones. Silver prices are currently around 63.3 USD/ounce, while the next support zone is being monitored around 62.57 USD/ounce. To recover, silver needs to surpass the 65.6 USD/ounce mark again.
In the near future, the gold market will continue to focus on US economic data, especially the consumer inflation report before the Fed's policy meeting. If inflation does not cool down as expected, pressure on gold may continue to increase.
The article only updates the developments of the gold market and factors affecting the price of precious metals, not investment recommendations.
