World gold prices suddenly increased sharply in the trading session on August 5, extending the winning streak to the third consecutive session.
As of about 1:40 PM on August 5th Vietnam time, spot gold prices increased by 2.4% to 4,175.53 USD/ounce. This is the highest price of the precious metal since July 7th. US gold futures also increased by about 2%, reaching 4,235.30 USD/ounce.
The strong increase in gold appeared in the context of the weakening USD, crude oil prices continuing to fall and the market adjusting forecasts on monetary policy of the US Federal Reserve (Fed).
The USD index remained near its lowest level in about 6 weeks, around 99.85 points. The weakening greenback made gold, which is valued in USD, more attractive to buyers using other currencies. US government bond yields also fell, thereby reducing the opportunity cost of holding interest-free assets like gold.
Another notable factor is the downward trend of oil prices. Brent oil retreated to around 78.85 USD/barrel, while US crude oil fell to nearly 75.09 USD/barrel, after the market recorded positive signals related to diplomatic efforts to cool down US-Iran tensions and improve transportation through the Strait of Hormuz.
Falling oil prices may help limit inflationary pressure. This makes investors narrow expectations that the Fed will continue to raise interest rates in the September meeting.
The market currently assesses the possibility of the Fed raising interest rates at the meeting on September 15-16 at around 59%, a significant decrease compared to the 67% recorded the day before. For gold, the prospect of less stressful interest rates is often a supporting factor because the precious metal does not bring a fixed yield.
Besides monetary factors, the market is still cautious in the face of conflicting information about the Middle East situation. Although signs are appearing that intermediaries are making progress in efforts to end the US-Iran conflict, different statements from related parties make the level of uncertainty still high.
Investors are currently focusing their attention on the ADP private sector jobs report, the US service index and especially the July jobs report expected to be released at the end of the week. These figures may directly impact interest rate expectations and determine the next direction of the USD as well as gold prices.
The upward momentum also appeared in other precious metals. Spot silver prices increased by 3.8%, to 61.76 USD/ounce; platinum increased by 2.6%, and palladium also increased by about 2.6% and reached its highest level in two months.
The article only reflects market developments, not investment recommendations.
