World gold prices continued to extend their recovery momentum in the week after a series of new US data showed that the labor market is cooling down, thereby reducing expectations that the US Federal Reserve (Fed) will soon continue to raise interest rates. In addition, cooling oil prices and tensions in the Middle East that have not escalated further also contributed to improving sentiment in the precious metals market.
As of 7:06 PM Vietnam time, spot gold prices increased by 2.74% to 4,179.78 USD/ounce, after increasing by more than 2.3% in the previous session - the strongest increase in about three weeks. Overall for the week, gold prices currently record the strongest weekly increase since the end of May.
The market currently assesses the possibility of the Fed continuing to raise interest rates in the July meeting at only about 18%, a significant decrease compared to the level of about one-third recorded at the beginning of the week. At the same time, expectations for another wave of interest rate hikes are also pushed back towards the end of the year as inflationary pressure shows signs of easing.
The adjustment in monetary policy expectations has reduced the strength of the USD, while US Treasury bond yields remain around 4.5%. The expected less rigid interest rate environment helps gold improve its attractiveness after a period of pressure from high opportunity cost holdings.
In the energy market, oil prices continued to trade near levels before the conflict in the Middle East broke out. WTI oil fluctuated around 69.4 USD/barrel, while Brent oil was around 72.1 USD/barrel. The decrease in oil prices has contributed to cooling concerns about inflation, thereby reducing pressure on the Fed to maintain tight monetary policy for a long time.
In addition, transportation through the Strait of Hormuz is gradually stabilizing again after contacts between the US and Iran in Qatar. However, disagreements related to control of this strategic shipping route have not been completely resolved, causing geopolitical factors to continue to play a supporting role for gold holding demand.
Technically, the fact that gold prices quickly returned above the 4,100 USD/ounce threshold shows that buying power has improved significantly after the adjustment period. However, the 4,162-4,214 USD/ounce zone is still considered an important resistance level. If successfully surpassing this area, gold prices may head towards the 4,383 USD and 4,412 USD/ounce levels.
In the opposite direction, the 3.959 USD/ounce mark continues to be the nearest support zone. If selling pressure increases and the price breaks through this threshold, gold may retreat to the 3.942 USD/ounce area, further back to about 3,886 USD/ounce.
Not only gold, the precious metals market also recorded positive developments in many other commodities. Silver prices recovered to around 61.5 USD/ounce after ending a seven-week consecutive decline, while platinum and palladium both increased by about 1%, reflecting cash flow returning to the precious metals asset group.
In the short term, the diễn biến of gold prices is likely to continue to be affected by the expectations of the Fed's monetary policy, fluctuations of the USD, US government bond yields and geopolitical situation in the Middle East. If these factors continue to diễn biến in a favorable direction, the precious metal will have more opportunities to test higher resistance zones after a strong recovery in the week.
