The safe-haven demand has pushed gold prices to a three-month high. For the week, the price of gold has risen sharply by about 4%.
Phillip Streible, chief market strategist at brokerage Blue Line Futures, said the precious metal’s rise above $2,000 an ounce was impressive, but he wouldn’t be surprised if investor sentiment turned negative.
"Gold has been undervalued. But now investors are chasing it," he said.
According to David Morrison, senior market analyst at brokerage firm Trade Nation, gold has broken through $1,900, $1,950, $1,980 and could reach $2,000 an ounce. Gold is rising to a new all-time high.
In another development, US Federal Reserve Chairman Jerome Powell said the central bank is committed to bringing inflation down to 2%. This has pushed long-term bond yields to a 16-year high, with the 10-year bond hitting 5% last week.
It is worth noting that not all analysts believe that gold's rally is sustainable.
“Gold is currently rising against the current trend and the upward momentum may wane sooner or later. The precious metal is near overbought territory, making it vulnerable to a reversal under pressure from high bond yields,” noted Alex Kuptsikevich, senior market analyst at online trading platform FxPro.
Ole Hansen, a commodity strategist at Saxo Bank, agrees, predicting a drop in prices. Not because the gold rally is over, but because the market needs to consolidate at the resistance level of $1,985 an ounce.
Investors will be looking to inflation data this week, with some analysts saying that while the U.S. may not be in recession, it will be heading toward stagflation, due to low growth and higher consumer prices.
Markets will also be focused on global central bank policy. The Bank of Canada and the European Central Bank will announce monetary policy decisions, with economists watching to see how the big guys will tread the fine line between slower growth and persistent inflation.
As of 5:00 p.m., the world gold price is trading at 1,977.20 USD/ounce. In the afternoon, domestic businesses are simultaneously adjusting the price of precious metals down. SJC gold is currently listed at 70.10 - 70.82 million VND/tael (buy - sell), down 150,000 VND/tael and 250,000 VND/tael respectively.
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