Over the past week, world gold prices have seen a significant increase. As of 5:00 AM on March 29, 2024 (Vietnam time), the spot price of gold was $2,232.10 per ounce. This is equivalent to the record high price of gold from the previous week, amidst the Federal Reserve's (FED) continued forecast of three interest rate cuts in 2024.
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| People buy gold in China. Source: Chan Long Hei, Bloomberg. |
However, an increasing number of investors are questioning the Fed's forecast, as inflation in the US is hotter than expected. This has led many Fed officials to be more certain about the possibility of only two, or even just one, interest rate cuts this year. Since gold prices typically move inversely to interest rates, uncertainty about the pace of interest rate cuts could weigh on gold prices in the coming months.
Speaking to The Wall Street Journal, a representative from market research firm BMI Research stated that the main drivers of global gold prices this year will be the US exchange rate, the value of the dollar, and global geopolitical situations. However, gold purchasing power in China could be a significant factor that few investors have anticipated.
According to a 2023 report by the World Gold Council (WGC), the People's Bank of China bought more gold than any other central bank in the world, totaling 225 tonnes. This was China's largest increase in gold reserves since 1977, just as the country prepared for economic reforms. A similar trend of gold hoarding is also occurring among pension funds, insurance companies, and state-linked investment firms in China, although official figures on the amount are unavailable.
Stock traders in China are also buying shares of gold mining companies and flocking to gold exchange-traded funds (ETFs). According to the China Gold Association, total assets under management by gold ETFs reached a record high in January, at $4 billion. On March 15, shares of Zijin Mining, one of China's largest gold and mineral mining companies, closed at an all-time high.
In the first two months of this year, China also imported approximately 367 tons of precious metals for non-monetary use, a 51% increase compared to the same period last year. Sales of gold products and gold jewelry in China also increased by 24% year-on-year during the recent Lunar New Year holiday. Economic anxieties are also a reason why many domestic consumers are buying gold.
In an interview with The Wall Street Journal, John Reade, chief market strategist at WGC, said that the prolonged real estate crisis, a sluggish stock market, and economic instability are the main reasons driving demand for gold in China. With the yuan at its lowest level against the dollar this year, investors are further encouraged to invest in gold, which is considered a safe haven during difficult times.
Many experts believe that this strong gold buying in China has laid the groundwork for the recent surge in gold prices. Nikos Kavalis, managing director of precious metals consulting firm Metals Focus, told the Wall Street Journal: “I don’t think Chinese demand alone is enough to push global gold prices higher. But if the gold market experiences any major shifts, strong gold demand from China will help stabilize prices.”
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| Chart showing fluctuations in world gold prices, recorded at 11:08 AM on March 29, 2024. |
At 2:00 PM on March 29, 2024, world gold prices surged, reaching $2,233.48 per ounce, up $1.38 from the previous opening. The June 2024 gold futures contract on the Comex New York exchange was trading at $2,254.80 per ounce.
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| Gold prices at Saigon Jewelry Company Limited (SJC) at 2:00 PM on March 29, 2024. |
Domestically, as of 2:00 PM on March 29, 2024, the price of SJC gold, as listed by Saigon Jewelry Company Limited (SJC), was 79 million VND/ounce for buying and 81 million VND/ounce for selling.
SJC gold prices at Bao Tin Minh Chau are trading at 79.35 - 81.25. Gold prices rose by 350,000 VND/ounce for buying and 300,000 VND/ounce for selling compared to yesterday's closing price.
Gold rings also continued their upward trend, following the rise in world gold prices. At Bao Tin Minh Chau, this morning, March 29, 2024, gold rings were still listed at 69.28 million VND/ounce for buying and 70.48 million VND/ounce for selling. According to Bao Tin Minh Chau, at their business locations this morning (March 29), the ratio of customers buying to selling was 55% buying and 45% selling.
Offering advice to gold investors and the general public, some economic experts analyze that, in reality, gold has always been a "store of value," not an investment channel with attractive returns. Although the price of gold may rise during certain periods, this increase is only short-term and difficult to sustain in the medium or long term. Therefore, investors and the public should carefully consider before selling to lock in profits, rather than holding on for a long time.
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