Set a historical peak in early December

In the last trading session of the week and also the beginning of December in the US market (early morning of December 2, Vietnam time), the world gold price reached a record high. Specifically, the price of gold for delivery in February 2024 increased by 4% in the last session of the week to 2,091.9 USD/ounce. The previous record high was 2,089.2 USD/ounce recorded in August 2020.

Spot gold prices jumped from below $2,040 an ounce to $2,071 an ounce.

The world gold price in the early morning of December 2 (Vietnam time) was about 13.5% higher (247 USD/ounce) than at the beginning of 2023. The world spot gold converted to the bank USD price was 61.5 million VND/tael, including taxes and fees, about 12 million VND/tael lower than the domestic gold price as of the end of the afternoon session on December 1.

With this development, in the first trading session of the new week on December 4 in the Vietnamese market, the price of SJC gold may surpass the historical peak of 74.5 million VND/tael recorded on the morning of November 29.

Gold recorded a surge in demand as investors continued to bet on the possibility that the US Federal Reserve (Fed) could reverse monetary policy and cut interest rates as early as March 2024.

The weekend rally came even as the Fed signaled it would maintain its tightening stance, with Fed Chairman Jerome Powell saying on December 1 that he was still not confident that current monetary policy would be enough to bring U.S. inflation down to its 2% target.

It can be seen that investors in the gold market are no longer interested in what Fed Chairman Powell says. The Fed interest rate monitoring tool - CME FedWatch Tool shows that the possibility of the Fed cutting interest rates in the first quarter of 2024 has skyrocketed, specifically the forecast has increased from 25% to 50%.

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SJC gold bar prices may hit a new peak in the Vietnamese market next week. (Photo: HH)

Forexlive experts shared on Kitco that technical analysis signals are also supporting the upward trend of gold prices, especially after spot gold prices closed firmly above the important psychological threshold of $2,000/ounce.

According to experts from Zaye Capital Markets, with recent developments, gold is at the beginning of a stronger breakout. And “bright days are ahead.”

“We believe the Fed has reached the peak of its rate hike cycle regardless of what some Fed members continue to say. There is a realistic chance that the Fed will cut rates by the end of Q1/2024,” Zaye Capital Markets experts said.

Cracks continue to appear in the US commercial real estate market as the sector continues to be impacted by the Fed's aggressive rate hikes and high hiring rates as workers continue to work from home, according to Robert Minter, chief investment strategist at Abrdn.

Gold price uptrend “far from over”

According to Robert Minter, in the three most recent times the Fed stopped its interest rate hike cycle, the world gold price increased by 57%, 235% and 69% respectively. But this time, gold has only increased by 5.4% since the Fed switched to a “neutral” stance.

Gold market expert Gary Wagner told Kitco that the uptrend in gold and silver is “far from over,” especially gold.

According to Gary Wagner, the market is very fond of gold as a safe haven asset.

One reason mentioned by many experts is the demand of the "big guys" in the international market when the world has major changes in international relations and the balance of power.

According to the World Gold Council (WGC), the rate of gold accumulation by central banks around the world is at a new record level. Investors have repeatedly asked why this trend is occurring.

The fundamental reasons for gold’s continued rise are pretty clear. According to Gary Wagner, the U.S. national debt has grown to a record high of over $34 trillion. The cost of just paying the interest on that debt is quickly becoming as expensive as the annual budget of the U.S. Department of Defense.

On multiple occasions, both Chairman Jerome Powell and Treasury Secretary Janet Yellen have made it clear that this situation is unsustainable for the United States.

Add to that a number of geopolitical hot spots that continue to heat up. And there’s the recent decline in the US dollar, which could fall further as the Fed reverses its monetary policy.

On the flip side, another factor that has some investors a little cautious is the threat of persistent inflation, in which case the market is betting the Fed could keep interest rates at current levels through the second quarter of 2024.

Even so, some analysts say that with a weakening economy, the Fed will eventually cut rates, sooner or later. The interest in holding gold has been reflected in strong demand from central banks and consumers in many countries, especially in Asia.