29 new peaks since the beginning of this year

In the trading session on August 20 on the New York Stock Exchange (early morning of August 21, Vietnam time), the world gold price increased rapidly and set a new record: the spot price at times exceeded the threshold of 2,530 USD/ounce (equivalent to 77.2 million VND/tael). The price of gold for December delivery also reached 2,565 USD/ounce.

This is the 29th peak of gold since the beginning of the year.

Gold prices have increased so rapidly, overwhelming many other assets, from $1,820/ounce in October last year to $2,530, equivalent to an increase of 39%, causing many people to worry that this commodity will reverse and drop dramatically.

In fact, since the end of 2023, gold prices have set new record highs many times, but there have also been many sharp declines. After surpassing the threshold of 2,400 USD/ounce, gold has fallen back below the threshold of 2,300 USD/ounce several times.

Profit-taking pressure every time there is a sharp increase is common for all types of assets and commodities, including gold.

Some forecasts suggest that gold could correct by hundreds of dollars per ounce after this sharp increase; however, most say the outlook remains bright for the precious metal.

The price of gold over the past year also shows a very clear upward trend.

Gold has continued to increase strongly in recent days and reached a new peak due to the rapid decline of the USD, increased demand for gold, escalating geopolitical tensions in the Middle East and Ukraine, as well as the abundant amount of money with no place to invest from organizations and funds around the world.

In last night's trading session, the USD continued to fall sharply by another 0.5% and for the first time since late December 2023, the DXY index - measuring the USD's fluctuations against a basket of 6 major currencies - fell below the 101.5 point threshold.

By the morning of August 21, in the Asian market, the DXY index fell to 101.4 points, compared to 102.9 points on August 16 and 106.25 points at the end of April.

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Gold prices have many supporting factors in 2024 and 2025, including the race to the White House. Photo: KC

The USD has fallen as the world enters a cycle of monetary policy easing to support the economy , although inflation has not yet reached the desired level. Many countries have cut interest rates once or twice. The US Federal Reserve (Fed) is almost certain to cut interest rates at its meeting in September.

Investors are now focused on the Fed's interest rate path. More clues about U.S. monetary policy will be revealed at the Jackson Hole conference this weekend at the Jackson Hole resort in Wyoming.

The market is betting on the possibility that the Fed will accelerate interest rate cuts as the US economy shows many signs of deterioration, while inflation has fallen to 2.9%.

Gold will go up to 3,000 USD/ounce?

Many analysts believe that gold will continue to increase for the rest of the year and reach $3,000/ounce (over VND92 million/tael) next year.

Sabrin Chowdhury, Head of Commodity Analysis at BMI, believes that gold is a safe haven asset, which is why the commodity has continued to set new records in 2024 and will continue to do so.

According to BMI experts, 2024 will see many uncertainties from geopolitical tensions in the Middle East, Ukraine and Russia and will be a year with many important elections, including the race for the White House in the US.

Gold prices are expected to rise further following more dovish developments on the Fed's monetary policy.

In the FT, San Francisco Fed President Mary Daly believes that US inflation is under control and said it is time to consider cutting interest rates from the current 23-year high of 5.25-5.5%. She called on the Fed to take a rational approach to push back economists' concerns that the US economy is entering a period of sharp slowdown.

When the Fed starts cutting interest rates, according to Sabrin Chowdhury, gold will reach $2,700/ounce (equivalent to VND82 million/tael). Many other analysts share the same opinion as the BMI expert.

Accordingly, lower interest rates will put pressure on the USD. The US currency will depreciate.

China is expected to resume buying gold after several months of hiatus. Beijing had previously been a net buyer of gold for 18 consecutive months, only pausing when gold continued to hit record highs.

Gold was also supported by rising demand in India, where the country reduced its import duty on gold from 15% to 6%. According to JPMorgan, sales of gold jewelry chain Senco Gold in India increased by 30% in the first half of the second quarter, compared to a 10% increase in the first quarter. Physical gold demand in India is forecast to increase by 50 tons in the second half of the year thanks to the tax reduction.

Many central banks have also stepped up gold purchases in recent years. Western gold ETFs have also been net buyers of gold.

It can be seen that the demand for gold is constantly increasing even though the price is increasing.

Meanwhile, the war in the Middle East could erupt and spread if Iran and Israel do not restrain themselves. In Ukraine, the situation is also very tense as the Ukrainian army launches a cross-border operation targeting the Kursk region in central Russia. The US increases strong pressure on the Palestinian armed group, while Israel continues to threaten to eliminate Hamas.

Experts from Citi said that gold is on an upward trend in the next 3-6 months and believe that gold will reach 3,000 USD/ounce in 2025. The average spot gold price in the fourth quarter of 2024 will be 2,550 USD/ounce.

Domestically, the price of gold rings is high. The price of 9999 gold rings at SJC Company as well as at some other businesses was sold at around 77.4 million VND/tael on the morning of August 21. This price is only about 500,000 VND/tael higher than the converted world price as of early morning August 21 (compared to the difference of about 3 million VND at the end of the afternoon of August 12). The selling price of SJC gold bars on the afternoon of August 21 was at 81 million VND/tael (selling price).

Gold price hits new historical peak, is the 'storm' not over or has it just begun? World gold prices skyrocketed in the last trading session of the week and hit a new historical peak in the context of the USD falling quite rapidly and geopolitical instability escalating in many regions, including the Middle East. A price storm that has not ended.