Early 2024: the world is flat, domestic growth is soaring

Gold prices in the international market tend to move sideways at the beginning of the new year 2024 in the context of the USD increasing by about 0.8% after falling by about 5.6% in the last 2 months of 2023.

In the first two sessions of the year, January 2-3, the spot gold price on the international market fluctuated around the threshold of 2,055-2,070 USD/ounce, equivalent to about 61.5-61.8 million VND/tael, including taxes and fees.

The USD has slightly increased again while geopolitical instability has increased and demand from Asia is high. This is keeping the world gold price from fluctuating much.

However, in the domestic market, gold prices fluctuated violently in the first two sessions of the new year.

In the session on January 2, the price of SJC gold bars increased by 4 million VND/tael compared to the closing price of the last session in 2023 to over 77 million VND/tael, before adjusting to 75 million VND/tael at the end of the day.

In the session on January 3, the price of SJC gold bars in the late morning hours jumped to 75.5 million VND/tael and was about 14 million VND/tael more expensive than the converted world gold price.

Previously, on December 26, the difference reached a record of about 18 million VND/tael.

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World gold prices have increased sharply recently. (Photo: Kitco)

The difference between buying and selling prices at gold shops on the morning of January 3 was maintained at 3 million VND/tael.

At the end of 2023, the difference between buying and selling prices sometimes reached 6 million VND/tael, which is also an unprecedented difference in history.

According to Bao Tin Minh Chau's report, the price of gold bars on the morning of January 3 increased by about 500,000 VND/tael due to the number of customers buying more, about 55% of buyers and 45% of sellers at this unit's business establishments.

Although the world gold price is moving sideways, it is predicted that it can increase at any time due to many factors that can strongly support this precious metal.

In 2023, the world gold price increased quite impressively by 13%.

In 2024, there are many factors that could push the world gold price up, even reaching an unprecedented record. This year, many central banks have signaled a reversal in monetary policy, turning to lower interest rates. Lower interest rates reduce the opportunity cost of holding non-interest-bearing gold bullion.

Markets are now pricing in an 86% chance that the Federal Reserve will cut interest rates in March, according to market signals from the CME FedWatch tool. If true, the rate cut would come sooner than the Fed has signaled. The Fed had previously signaled three rate cuts in 2024, possibly starting mid-year.

This week, the focus of investors' attention is on the minutes of the Fed's December meeting, scheduled to be released on January 4.

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Gold rises, other commodities fall: Signs of economic recession.

Gold is forecast to hit an all-time high in 2024

At the beginning of the new year, Mike McGlonem, senior commodity strategist at Bloomberg Intelligence, said that as macroeconomic conditions continue to deteriorate, gold prices will likely reach new highs in 2024 and may even reach $3,000 (equivalent to VND89.5 million/tael).

At that time, if the difference of about 15 million VND/tael is added, the domestic price of SJC gold bars will reach nearly 105 million VND/tael.

McGlone noted that gold's appearance at the top of Bloomberg Intelligence's annual macro performance list while the Bloomberg spot commodity index is at the bottom suggests the market is on track for a global recession.

Another global recession signal is that energy is at the bottom of the annual performance scorecard in the commodities sector and precious metals are at the top, McGlone said.

To justify gold's potential to hit $3,000 an ounce by 2024, McGlone points to the commodity's performance relative to the broad US S&P 500 stock index over the past three and a half decades.

Accordingly, the chart over the past 35 years shows that the S&P 500 and gold have the potential to converge at 3,000. And gold will only face negative pressure in 2024 if interest rates in countries (including the US) and stock prices continue to rise.

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The relationship between gold prices and the S&P 500 stock index over the past three decades.

However, this is unlikely. The Fed has signaled a reversal in monetary policy after 11 rate hikes since March 2022. Meanwhile, many US stock indexes are at historical highs and are likely to come under downward pressure.

However, one factor that could hinder gold's upward momentum is the fact that central banks around the world have been limiting gold purchases after buying heavily in recent times and pushing gold prices to record highs.

But the reality is that most central banks have tightened monetary policy until Q3 2023. That means the impact of these actions will last until Q3 2024. The economies will show signs of difficulty until September 2024, thereby creating strong easing pressure and a positive impact on precious metals.

During times of economic trouble, debt often increases relative to GDP and gold often benefits during such times.

According to McGlone, gold will rise more strongly than most commodities in 2023, which is not a good sign for economies.

Another sign that gold will perform positively in 2024 is that outflows from gold exchange-traded funds (ETFs) in the fourth quarter of 2023 have decreased compared to previous years.

Historically, gold ETFs have seen outflows in the fourth quarter, but the opposite trend is likely to occur in 2023, thanks to central bank purchases.

Recently, the World Gold Council (WGC) forecasted that rising geopolitical tensions in many regions of the world and central bank buying trends are two of the many drivers that will continue to increase gold demand in 2024.

ANZ Bank experts predict that gold prices will reach $2,200/ounce in 2024. WisdomTree fund predicts that the precious metal will reach $2,300/ounce.

Gold price today January 3, 2024: SJC increased by 500,000 VND/tael despite the world gold price decreasing. Gold price today January 3, 2024, the world gold price reversed to decrease, while the domestic SJC gold bar price increased by 500,000 VND, up to 75.5 million VND/tael, although it is still far from the historical peak recorded at the end of 2023.