Domestic gold fell sharply

Domestic gold price

Source: Rong Viet Online Service JSC VDOS — Source: VDOS Dragon Online Service JSC.

Domestic gold price developments

World gold price developments

World gold prices increased despite the increase in the USD. At 6:35 p.m., the US Dollar Index, which measures the greenback's fluctuations against six major currencies, was at 106.232 points (up 0.14%).

Experts say gold still faces some headwinds. The strength of the US dollar has eased from its highs in the second half of 2022, but it still holds its ground. A strong US dollar is bad news for gold because it makes the metal more expensive to hold. The price of the metal, which is priced in US dollars, can hurt foreign demand. As a result, when the dollar strengthens, gold prices tend to fall.

The outlook for the US dollar is said to be unpredictable and largely depends on whether the US economy enters a recession, how quickly inflation falls and what the US Federal Reserve (FED) does.

Interest rates are also inversely related to gold prices. With interest rates remaining high – and possibly rising – bonds and fixed income investments are an attractive alternative to gold. If the rate hike cycle ends, gold will continue to benefit.

However, recently, US Federal Reserve Chairman Jerome Powell expressed concern that global instability would affect the FED's anti-inflation campaign.

He also left open the possibility of raising interest rates in the near future, because the decision of the Federal Open Market Committee depends on the actual situation. If the FED continues to tighten policy, the gold market will face pressure.

According to the World Gold Council, 2022 was the strongest year for gold consumption in more than a decade. That trend reversed in 2023, with demand for gold falling 13% year-on-year in the first quarter. Continued purchases by central banks around the world were not enough to offset demand.

Markets are now focused on the US third-quarter GDP report due on Thursday (October 26), the personal consumption expenditures (PCE) price index due on Friday (October 27) and a number of other economic reports, especially speeches by European Central Bank President Lagarde and Federal Reserve Chairman Jerome Powell.

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