Gold price at a disadvantage, USD rising sharply, Fed divided, will gold continue to explode?

Gold prices today, May 26, 2023, are unstable, but there are more declines than increases. The US dollar has risen to its highest level since mid-March, making gold expensive. But uncertainty about the US debt ceiling has investors worried. Gold is still the "safe haven" of choice in the context of a volatile global economy .

LIVE UPDATE TABLE OF GOLD PRICE TODAY 5/26 and EXCHANGE RATE TODAY 5/26

1. SJC - Updated: 05/25/2023 10:30 - Website time of supply - ▼ / ▲ Compared to yesterday.
Type	Buy	Sell
SJC 1L, 10L	66,500	67,100
SJC 5c	66,500	67,120
SJC 2c, 1c, 5c	66,500	67,130
SJC 99.99 gold ring 1 chi, 2 chi, 5 chi	55,700 ▼150K	56,650 ▼150K
SJC 99.99 gold ring 0.5 chi	55,700 ▼150K	56,750 ▼150K
Jewelry 99.99%	55,550 ▼150K	56,250 ▼150K
Jewelry 99%	54,493 ▼149K	55,693 ▼149K
Jewelry 68%	36,404 ▼102K	38,404 ▼102K
Jewelry 41.7%	21,609 ▼62K	23,609 ▼62K

World gold prices turned down as the US dollar continued to rise to its highest level in more than two months, reducing demand for gold, while investors are waiting for the next developments in negotiations on the US debt ceiling.

According to TG&VN 's records at 9:20 p.m. on May 25 (Vietnam time), the gold price traded on Kitco floor was at 1,948.8 - 1,949.80 USD/ounce, down 8.7 USD compared to the previous session . The gold futures price for June delivery decreased 0.14% to 1,961.85 USD/ounce.

Also affecting gold prices this session was the release of the minutes of the US Federal Reserve's May meeting. The minutes showed that central bank officials were divided on whether further interest rate increases were needed. They said that it would still depend on future economic data.

Minutes from the Fed’s May 2-3 meeting showed policymakers were uncertain about the path of interest rates, or how much further tightening would be appropriate. Some viewed the “unacceptably slow” pace of inflation as warranting further rate hikes. Others noted that if the economy continues to slow as expected, further tightening may not be necessary. As a result, the likelihood of the Fed continuing to raise rates is no longer certain.

The US dollar has appreciated by about 2.5% in the past month, as the possibility of the Fed cutting interest rates soon has decreased. This is one reason why gold prices have fallen to near the current 1.5-month low. Many experts believe that if the debt ceiling crisis is resolved promptly and the US dollar continues to increase in value, gold will be at a great disadvantage.

Gold price today May 26, 2023: Gold price goes down, USD goes up, Fed is divided, will gold still explode? (Source: Shutterstock)

But discussions between President Joe Biden’s administration and Republicans over the debt ceiling have yet to find common ground, with the June 1 “default” deadline just days away. Some participants noted that failure to raise the $31.4 trillion debt limit in a timely manner risks significant disruption to the financial system and tighter financial conditions that could weaken the economy.

With the uncertainty surrounding the debt ceiling deal, gold is seeing safe-haven flows, said analyst Peter Fertig of Quantitative Commodity Research .

The domestic gold price has not left the 67 million VND/tael mark, the difference between the converted world gold price and the converted world gold price has increased sharply to over 11 million VND/tael. The USD exchange rate at Vietcombank is still hovering around 23,300 VND (buy) and 23,640 VND (sell), not much changed in recent sessions.

Summary of SJC gold prices at major domestic trading brands at the closing time of the session (May 25):

Saigon Jewelry Company listed the price of SJC gold at 66.50 - 67.12 million VND/tael.

Doji Group currently lists SJC gold price at: 66.40 - 67.00 million VND/tael.

Phu Quy Group listed at: 66.40 - 67.00 million VND/tael.

PNJ system listed at: 66.45 - 67.00 million VND/tael.

SJC gold price at Bao Tin Minh Chau is listed at: 66.45 - 67.00 million VND/tael; Rong Thang Long gold brand is traded at 55.88 - 56.78 million VND/tael; jewelry gold price is traded at 55.45 - 56.55 million VND/tael.

Gold is a safe haven?

The main driver of gold’s resurgence is concern about the reliability of other assets. As markets become more volatile, investors have turned to gold. However, gold’s outlook, both long-term and short-term, is likely to be uncertain.

Gold has long been a safe haven in times of turmoil. The Covid-19 pandemic, the Russia-Ukraine conflict, geopolitical tensions, inflation concerns, rising global debt, high interest rates and banking crises have caused investors to reassess their asset portfolios, benefiting gold.

In addition, developing countries have become increasingly wary of the strength of the US dollar, especially after the US and the West froze $300 billion of Russia’s foreign exchange reserves. Many countries have understood that the US dollar is a weapon for the US, so they have rushed to diversify by buying more gold.

While the share of the US dollar in global foreign exchange reserves has fallen from over 70% in the 2000s to just 58% in the fourth quarter of 2022, gold has rallied 20% since last November and is trading just below $2,000 an ounce following the collapse of three US regional banks and the takeover of Credit Suisse by UBS. If today’s stagflation, geopolitical tensions and de-dollarization trends persist, gold is expected to continue to shine.

Wealthy people around the world are rushing to stockpile gold, according to Ashok Sewnarain, CEO of IBV International Vaults . Central banks in emerging markets are also stockpiling gold. Last year, central banks bought 1,079 tons of bullion, the most since 1950. As a result, gold prices have been nearing an all-time high of $2,072 an ounce since late March. Many speculators are holding their breath as they wait for a new record.

On the flip side, gold prices can also be volatile. As fear and panic subside, the rally could end. At the same time, concerns about gold’s environmental impact and limited applications in the energy transition could dampen the metal’s long-term prospects.

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