Downhill from historical peak

The spot gold price on the international market has just had a week of sharp decline, falling from the historical peak of more than 2,950 USD/ounce on February 20 and closing the week at 2,858 USD/ounce.

The decline began when investors rushed to sell in the middle of the week, pushing the price of gold below $2,900/ounce. Gold then continued to slide to the $2,880/ounce range. By the end of the week, selling pressure increased sharply, especially when gold lost the support level of $2,850/ounce, triggering additional automatic sell orders, pushing the price down to nearly $2,830/ounce.

Despite the ongoing geopolitical uncertainty, gold prices have been unable to maintain key levels as safe-haven flows have temporarily shifted. If gold continues to fall below $2,800 an ounce, it is at risk of a deeper correction in the short term.

So what caused the price of gold to drop sharply, about 100 USD/ounce last week and what is the forecast for the coming time?

Gold prices fell as investors rushed to take profits in the first two sessions of the week, in the context of gold prices continuously climbing and reaching a record of 2,955 USD/ounce on February 20.

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Gold prices plunge after hitting a historic peak. Photo: Kitco

In addition, positive US economic data raised concerns that the US Federal Reserve (Fed) would delay cutting interest rates, causing profit-taking to increase more strongly, continuously losing important support levels of $2,900 and $2,880/ounce.

In the middle of the week, the USD weakened but not enough to support gold, while the world stock market - including US stocks - and cryptocurrencies fluctuated strongly, thereby draining cash flow from precious metals.

It can be seen that gold prices have fallen sharply in recent days, despite increasing geopolitical instability and fluctuations from US President Donald Trump's tax policy, and also due to the USD's rebound at the end of the week.

Gold prices typically have an inverse relationship with the US dollar. When Mr. Trump threatens to impose heavy tariffs, such as a possible 25% on the EU or an additional 10% on China, the market expects this policy to boost inflation in the US, causing the Fed to maintain higher interest rates than expected or delay cutting interest rates. This increases the attractiveness of the US dollar, pushing the USD index up.

When the US dollar strengthens, gold - which is priced in dollars - becomes more expensive for foreign investors, leading to selling pressure and falling prices.

However, the USD factor is considered to have had a small impact last week, but mainly due to profit-taking after the hot increase. Gold prices reached a historical peak last week due to expectations that gold is a safe haven asset amid geopolitical instability (such as the Russia-Ukraine conflict or Middle East tensions).

What is the outlook?

However, after the sharp increase, many investors decided to sell to take profits, especially when gold fell to $2,888-2,905/ounce in the recent trading session, when the US tried to join in ending the Russia-Ukraine conflict. This sentiment increased when other assets such as stocks and cryptocurrencies were also under selling pressure, causing money to disperse.

Despite heightened geopolitical uncertainty, the US stock market has been volatile recently, with the S&P 500 hitting a record high. Similarly, the cryptocurrency market (like Bitcoin) has also weakened after the post-Trump election boom.

When these risky assets fall, money does not necessarily flow into gold but can shift to other channels such as US government bonds (yields are slightly lower but still attractive), reducing demand for gold. Gold is even sold to cover losses in other markets.

In addition, the decline in gold prices is also due to technical adjustments in the gold market. Many experts believe that the decrease of about 100 USD/ounce from the peak is a natural correction after a long increase. Gold prices need to "rest" to accumulate before conquering a new price zone, especially when there is no immediate major shock from geopolitics to push prices up immediately.

In the medium and long term, gold is still forecast to increase in price and set new peaks in 2025.

In the immediate future, due to the impact of the collapse of the US-Ukraine mineral agreement.

The meeting between US President Donald Trump and Ukrainian President Volodymyr Zelensky at the White House on February 28, which included discussions on this issue, turned into a tense argument, leading to the cancellation of the scheduled press conference and no agreement being reached.

Gold prices may be supported as the world faces more uncertainty following a series of new tax policy announcements by Mr. Trump. Mr. Trump has just announced an additional 10% tax on imported goods from China from March 4, bringing the total tax rate to 20%. He also threatened to impose a 25% tax on goods from the European Union (EU), Mexico and Canada.

Investors are now waiting for important economic data coming up on GDP, unemployment, etc. to better assess the Fed's interest rate roadmap. In the short term, this uncertainty will cause gold to lose its upward momentum, but in the long term, trade instability can support gold.

Goldman Sachs Research has just forecast that gold prices will increase by 8% by 2025 to reach $3,100/ounce, despite the fact that gold has increased by more than 40% since the beginning of 2024. Accordingly, demand from central banks will continue to maintain the momentum to new highs. The organization believes that increased buying from gold ETFs will boost gold prices, making the precious metal more attractive to investors.

Domestically, SJC gold bars and plain rings were also gloomy last week, falling for three consecutive sessions, ending the week far from the 91 million VND/tael mark. However, gold rings are still "more valuable" as the selling price of Doji rings is 500,000 VND to a million VND per tael more expensive than gold bars. If the downward trend of world gold prices does not stop, domestic gold will inevitably decrease as well.

Gold price forecast for the next 10 days: World record, gold rings and SJC bars have new peaks? Gold price forecast for the next 10 days in the world may reach 3,000 USD/ounce due to many supporting factors. Domestically, gold rings and SJC bars will continue to rise following world gold prices and due to strong buying demand.