The precious metal remained at a five-week high early on March 16 (Vietnam time) thanks to safe-haven demand as concerns about a global financial/banking crisis intensified mid-week. The banking crisis that began in the US late last week has spread to Europe. Falling US Treasury yields and a much stronger US Dollar Index are signs that traders and investors are nervous and want to hold those safe-haven assets.
The European Central Bank meets on Thursday and is expected to raise its benchmark interest rate by 50 basis points. However, the current shaky banking sector in the euro zone could change the ECB's plans at the last minute. The Federal Reserve meets next week and is expected to have a heated market debate over whether the Fed will raise its benchmark interest rate by 25 basis points or leave it unchanged amid the US banking crisis.
Both world and domestic gold prices increased sharply today.
Gold price movements today
+ Domestic gold price
At 3:00 p.m. on March 16, the gold price at Doji was listed at 66 - 66.95 million VND/tael (buy - sell), an increase of 350,000 VND/tael in the selling direction.
Meanwhile, the gold price at SJC was listed at 66.3 - 67 million VND/tael (buy - sell), an increase of 300,000 VND/tael in both buying and selling compared to the afternoon of March 15.
The price of jewelry gold and 24K gold rings of all kinds is traded around 52.8 - 55.05 million VND/tael.
+ International gold price
At the same time, the world gold price listed on Kitco was at 1,919 USD/ounce, up 31 USD compared to the afternoon of March 15.
On the night of March 15 (Vietnam time), the world spot gold price stood at around 1,925 USD/ounce. Gold for April delivery on the Comex New York floor was at 1,928 USD/ounce.
The world gold price on the night of March 15 was about 5.5% higher (101 USD/ounce) than at the end of 2022. World gold converted to the bank USD price was 55.9 million VND/tael, including taxes and fees, about 10.8 million VND/tael lower than the domestic gold price as of the end of the afternoon session on March 15.
Gold prices on the international market increased sharply despite the USD also climbing. Investors are worried that the banking crisis will spread from the US to the world when there are bad signals in Europe.
Gold prices surged to a five-week high as investors sought refuge from the storm. Fears of a global banking/financial crisis are growing.
In Europe, bank shares fell across the board, including Credit Suisse, after investors grew concerned about the bank's financial health.
The banking turmoil has spread from the US to Europe.
Gold Price Forecast
The Fed’s completion of its tightening cycle will send gold to a new record high, according to Mike McGlone, senior macro strategist at Bloomberg Intelligence. Gold’s trading pattern this year could mirror that of 2018, when the precious metal broke through $1,350 an ounce as the Fed signaled a shift from tightening to easing. Current conditions appear to be ripe for gold to head toward $3,000 an ounce, he said.
Meanwhile, Bart Melek, head of commodities at TD Securities, said that the gold market is likely to correct and stabilize in the short term. The precious metal will lose momentum and lose recent gains next week as the Fed remains a threat after the February inflation report.
February’s inflation report showed price pressures easing but not fast enough, so markets still expect another 25 basis point rate hike at the March 22 meeting despite the recent banking sector meltdown.
Melek noted that with inflation high, it would be difficult for the US central bank to shift to a dovish stance at this point, especially as systemic risks are receding amid supportive measures by authorities to stabilize financial markets.
Melek added that given the macro backdrop, it is still too early for gold to have a “sustained rally.” He expects gold to stabilize this week. However, that doesn’t preclude another big rally later this year, especially as the Fed begins to pivot its monetary policy.
As markets focus on economic measures like inflation and wage growth to determine the Fed's direction, TD Securities forecasts gold will trade above $1,925 an ounce by the end of the year.
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