Factors that could help gold 'fly higher' this week

Gold bars are displayed at a gold exchange in Seoul, South Korea. (Photo: Yonhap/VNA)

While gold prices recorded a decline last week, there are compelling reasons to believe the precious metal could get a boost this week with long-awaited interest rate cuts and the risk of an impending US jobs recession.

Gold prices fell slightly by 0.25% in the week from May 27-31 and extended the decline to the second consecutive week, in line with other commodities as the market lost optimism about the possibility of multiple US interest rate cuts this year due to persistently high inflation.

But compared to April, the world gold price in May still increased by a total of 1.8% and reached a peak of 2,449.89 USD/ounce on May 20, extending the increase streak to the fourth consecutive month.

This reflects the complex psychology of investors in the world gold market: They may be cautious in the short term but are quite confident about the long-term gold price outlook.

Confidence in the precious metal's outlook has also been bolstered by signs that investors outside China are finally paying more attention to gold.

After a period of observation, exchange-traded product (ETP) investors in some parts of the world are starting to buy into the precious metal, according to Nitesh Shah, Head of Macroeconomics and Commodities Research at financial services firm WisdomTree Europe.

He highlighted investment demand for physical gold in China as the main driver for the precious metal over the past month.

Mr. Shah noted that Chinese gold ETPs have seen inflows for five consecutive months. In April alone, they attracted 9 billion yuan ($1.3 billion), marking the highest monthly inflow on record and pushing total assets under management to another record high of 46 billion yuan ($6.4 billion).

After the decision to inspect two banks and four "giants" in the gold industry, the domestic gold market remained stagnant despite the plummeting price of precious metals on the international market.

Meanwhile, gold holdings here also recorded the largest monthly increase ever, up 17 tons to 84 tons.

But Shah said investors in North America could also be helping to drive gold prices. He pointed out that some of the strong flows into US-based ETPs in recent weeks could mean that outflows have been limited. The coming week promises to see the precious metals market return to normalcy with a slew of economic news, with some key headlines likely to push prices higher.

On Monday (June 3 local time), markets will receive the S&P global manufacturing purchasing managers' index (PMI) report, in addition to the ISM manufacturing PMI report for May 2024.

The Bank of Canada will then announce its interest rate decision on Wednesday (June 5). Economists expect the central bank to cut by 25 basis points. Later in the day, the market will get the ISM services PMI report for May.

The European Central Bank (ECB) will make its interest rate decision on Thursday morning (June 6). Markets are currently pricing in a 25 basis point cut from the ECB's benchmark rate. The US will also release its weekly jobless claims figures on the same day.

And finally, on Friday morning (June 7), the US will release the May non -farm payrolls report. If both central banks cut interest rates as expected and if the US May jobs report disappoints, the market could quickly recalculate the timing and scale of the US Federal Reserve's interest rate easing roadmap./.

According to vietnamplus.vn

Source: https://www.vietnamplus.vn/cac-yeu-to-co-the-giup-vang-bay-cao-hon-trong-tuan-nay-post956914.vnp

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