World gold price drops, domestic price hangs high

In the morning trading session on October 1 in the Asian market, gold prices continued to face strong selling pressure after a sharp decline from the end of last week and the beginning of the new week in the US market.

After reaching an all-time record high of 2,685 USD/ounce (equivalent to 80.9 million VND/tael), the spot gold price fell to 2,660 USD/ounce at the end of the week of September 23-27 and continued to reach 2,635 USD/ounce in the first session of the new week on the US market. By the morning of October 1, the spot gold price on the Asian market had reached 2,625 USD/ounce. The selling pressure continuously increased, causing the precious metal to continuously adjust downward.

Meanwhile, in Vietnam, the price of gold continues to increase. The price of SJC gold bars on the morning of October 1 was unexpectedly adjusted up by VND500,000, to VND84 million/tael (selling price) at 4 commercial banks and SJC Company.

SJC gold bars were adjusted to increase unexpectedly when they were continuously kept at 83.5 million VND/tael (selling price) throughout the previous week even though this was the time when world gold prices had many consecutive sessions of strong increase and reached a historical high on September 26.

SJC gold bars were sold at a stable price by 4 banks and SJC Company from June 3 at 81 million VND/tael (selling price) after the domestic gold market became hot, the price of gold bars on May 10 reached a peak of 92.5 million VND/tael.

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Gold prices hit a historic peak and may lose momentum to continue rising strongly. Photo: HH

A few sessions later, the price of SJC gold bars stabilized, at times dropping to 76.98 million VND/tael, before gradually increasing following the world price and reaching 84 million VND/tael as at present.

The price of gold rings had a very strong increase and reached an all-time high of 83.45 million VND/tael from September 26-28, only 50,000 VND/tael lower than the price of SJC gold bars.

In the last 2 sessions, the price of round gold rings has decreased but not significantly, still at a very high level, about 82.9 million VND/tael. With the rapid increase, the price of gold rings is predicted to surpass the price of SJC gold bars.

Domestic gold prices increased sharply and hung high at a historical peak in the context of world gold prices tending to decrease amid many changes in the world, especially geopolitical tensions in the Middle East.

The situation in the Middle East is considered to be entering a "dangerous moment", at its peak, but many people believe that it will soon enter a new, more stable phase when Israel is showing its dominance in the region, while other countries/forces appear much weaker/quieter.

If the Middle East stabilizes, world gold will lose an important driving force for price increases. This could be the turning point that ends the strong price increase streak that has lasted since the end of 2023.

Is the Middle East cooling down?

Early on October 1, the Israel Defense Forces (IDF) announced that it had launched ground attacks in southern Lebanon. Israel's ground attack on Hezbollah was seen by international media as a dangerous moment in the Middle East.

However, the operation was announced as “limited, localized and targeted” against the Hezbollah militant group in southern Lebanon. This is the next step after Israel “eliminated” most of Hezbollah’s leadership, including its longtime leader - Nasrallah.

According to the Israeli Foreign Ministry, all 18 senior members of Hezbollah, including leader Nasrallah and southern front commander Ali Karaki as well as the heads of several units were labeled "eliminated".

Mr. Nasrallah - Hezbollah's leader for more than 30 years - is considered a symbol of resistance to Israel and the person who turned Hezbollah into the powerful political and military force it is today.

On September 30, the Israeli army said it had killed Hezbollah leadership candidate Nabil Qaouk, deputy chairman of Hezbollah's "central council". Qaouk was considered one of the potential successors of the late Hezbollah leader Nasrallah, and played an important role in military operations against Israel.

In a latest move, Iran's Foreign Ministry affirmed that the country will not deploy troops to Lebanon or Gaza even though the country has always loudly said that it will respond to Israel, since Israel's assassination of the Hamas leader in Iran's capital Tehran to the recent shocking developments with Hezbollah forces in Lebanon.

Israeli Prime Minister Netanyahu warned on September 30 that there is no place in the Middle East that Israel cannot reach.

Israel’s ground assault on Hezbollah is seen as a dangerous moment, one that risks spreading instability in the Middle East. However, recent developments, including the “wiping out” of Hezbollah’s leadership, show Israel’s dominance. It could lead to a period of detente, similar to the one that followed the Six-Day War in June 1967 between Israel and a coalition of Arab states.

If this happens, gold prices will lose one more bullish impetus.

In addition, the recent surge in the Chinese stock market following Beijing’s unprecedented fiscal and monetary stimulus has also reduced demand for gold in the country. Previously, the People’s Bank of China (PBOC) stopped buying for three consecutive months after 18 months of net gold purchases.

Thus, at present, the important factor supporting gold is the USD which is on a downward trend as the US begins to enter a cycle of interest rate cuts (which may last until 2026). However, these signals have been partly reflected in the recent increase in gold prices.

In addition, tensions in Ukraine, high demand for gold in Asia during the year-end peak season, and the possibility that the new US president will continue to pump money into his new term (early next year) will also be factors supporting gold.

In the long term, China will still reduce its USD holdings and increase its gold purchases.

However, for now, the Middle East situation is still heating up following Israel's ground attacks on Southern Lebanon.

The world gold price on the evening of October 1 (Vietnam time) returned to the threshold of 2,656 USD/ounce. Bottom-fishing demand still appears every time the price drops.

Gold prices plummet: Will buyers have to 'hold' for a decade to break even? World gold prices are falling sharply after reaching a historic peak of 2,685 USD/ounce. Domestic gold ring prices hit a record high, close to SJC gold bars. Many people rushing to buy gold now, will they have to hold for 9 years to break even like in the 2012-2020 period?