"Strange phase"

After about 30 sessions remaining unchanged, on July 18, the price of SJC gold bars announced by 4 state-owned commercial banks (including Agribank, BIDV, Vietcombank, VietinBank) and SJC Company increased by more than 3 million VND, reaching 80 million VND/tael (selling price), in an effort to regain the narrow gap with the world gold price that had been created before.

Domestic gold traders say the gold market has just gone through a rare "strange" period. At times, the price of gold rings has surpassed the price of gold bars.

Domestic gold experts believe that the State Bank of Vietnam (SBV) has been forced to adjust domestic gold prices to catch up with the strong increase in world gold prices, and to prevent the large gap from re-emerging. To stabilize the domestic gold market, the issue is still the need for reasonable policies, so that money for gold can circulate in the market, instead of being "stored and preserved" as it is now.

Globally, after reaching a new record high of 2,480 USD/ounce, gold's upward momentum quickly faded and ended last week in the "negative zone" of 2,400 USD/ounce, the lowest level in three weeks.

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World gold prices fell sharply after climbing to a new record high. Photo: HH

Analysts were not surprised that gold hit a new record high and then quickly fell sharply after investors rushed to take profits. James Stanley, senior strategist at Forex, explained that the reason was that gold was at a high price and the market was overbought, vulnerable to further selling. That inevitably led to a sharp decline after a surge.

Analysts note that gold is now closely correlated with interest rate expectations. The rally to a new all-time high coincides with expectations that the US Federal Reserve will begin its monetary policy easing cycle in September.

According to CME's FedWatch tool, markets see a more than 90% chance that the Fed will cut interest rates in September.

Mr. Stanley said the only thing that could derail gold's upward trend is higher inflation, which would cause investors to lose expectations of a rate cut in September. While this scenario is unlikely, he said it is still a risk.

Investors are eagerly awaiting the June inflation report due later this month, which will also give the market its first look at second-quarter U.S. gross domestic product, Stanley added.

Beware of a similar plunge

In the context of policies having had certain effects, domestic gold prices no longer have unusual developments, unreasonably higher than world prices.

In the coming time, investors believe that gold rings will continue to be the preferred choice, while SJC gold bars are still not easily accessible.

As for the world gold market, many comments say that investors are cautious as gold is still at a high price, the market may witness large profit-taking sessions causing prices to become unstable.

Similarly, according to Kitco News' latest weekly gold survey, experts also gave somewhat cautious comments on gold price developments in the coming time.

Adrian Day, Chairman of Adrian Day Asset Management, said that gold needs to consolidate more favorable economic data to break out more in the following sessions, then the expectation is to end the week with the necessary increase to support the gold price.

Darin Newsom, senior market analyst at Barchart, sees gold continuing to trend lower in the coming time.

Adam Button, head of currency strategy at Forexlive, said the gold market had been on edge as China’s purchases stopped, and that heavy profit-taking late last week would make it difficult for the market to reverse. All eyes are now on US politics as the election approaches.

Analysts at CPM Group are advising investors to be cautious in the gold market in the coming time. He warned that the decline of $92.7 in the last two days of last week could be repeated in the following sessions of the new week.

Still, while last week's price decline may seem severe, it won't affect gold's appeal in the medium term, said Bob Haberkorn, senior commodities broker at RJO Futures.