World gold prices continued to fall sharply in the trading session on Thursday (September 18), as many investors realized profits on this precious metal after the meeting of the US Federal Reserve (Fed)…
The second strong session of the USD is also a cause of pressure on gold prices.
At 6:00 a.m. this morning (September 19) Vietnam time, the spot gold price in the Asian market decreased by 3 USD/oz compared to the closing price of the US session, equivalent to a decrease of 0.08%, trading at 3,642.6 USD/oz – according to data from the Kitco exchange. Converted according to the USD selling rate at Vietcombank, this price is equivalent to about 116 million VND/tael, a decrease of 800,000 VND/tael compared to yesterday morning.
At the same time, Vietcombank’s website quoted USD prices at 26,155 VND (buy) and 26,445 VND (sell), down 2 VND at each end of the price compared to yesterday morning.
Last night in New York, gold price closed at 3,645.6 USD/oz, down 15.2 USD/oz compared to the previous session’s closing price, equivalent to a decrease of 0.4%.
Earlier, spot gold prices fell nearly 0.9% in Wednesday’s session, despite hitting an all-time record of $3,707.4 an ounce.
On the COMEX exchange, gold for December delivery fell 1.1% in Thursday’s session, closing at $3,678.3 an ounce.
Gold prices have hit the major milestones of $3,600/oz and $3,700/oz respectively within the first half of September, as expectations of a Fed rate cut put downward pressure on the USD and strongly supported a non-interest-bearing asset like gold.
However, analysts said that expectation was basically fully reflected in gold prices, leading to profit-taking pressure after the Fed announced its decision to cut interest rates by 0.25 percentage points, which was not unexpected, on Wednesday.
In addition, many investors also saw the Fed as being more hawkish than they expected in its updated interest rate forecast. While the Fed forecasts two more rate cuts in 2025, in line with market expectations, it projects only one rate cut in 2026, fewer than what the market had expected.
And while the Fed has shifted its focus to protecting labor market growth, it has warned of persistent inflation, meaning it will remain cautious about further rate cuts in the near term. The Fed chairman described the rate cut as a risk management move, and stressed that the Fed will not ease prematurely.
These somewhat tough signals from the Fed are not beneficial for gold prices, and at the same time, the USD bounced back strongly after the Fed meeting.
The Dollar Index, which measures the greenback’s strength against a basket of six major currencies, rose 0.5% to 97.36 on Thursday, according to MarketWatch. It had risen 0.4% on Wednesday.
“There was a bit of confusion around Powell’s comments about the rate cut being a risk management measure, and that uncertainty led to some profit-taking in gold,” Peter Grant, vice president of Zaner Metals, told Reuters.
Still, Mr. Zaner believes that the long-term bullish trend for gold remains intact, and that a pullback after hitting a record high is completely natural. “This only adds momentum to the $4,000/oz target,” he said.
World gold price movements in the past month. Unit: USD/oz – Source: Trading Economics.
A lower interest rate environment is typically beneficial for gold prices, and the global trend of lower interest rates has contributed to a 39% rise in gold prices this year.
However, a report by SP Angel suggests that the diversification of foreign exchange reserves by BRICS central banks is the main driver of the ongoing gold bull market. The People’s Bank of China (PBOC) is leading the net buying of gold, and SP Angel believes that reserve diversification is not likely to stop anytime soon.
According to recently released data, gold imports from Switzerland to China increased 254% in August compared to July. Bloomberg news agency said that the PBOC is planning to loosen restrictions on gold imports, which would be a small step towards liberalizing the world’s largest market for physical gold.
The world’s largest gold ETF, SPDR Gold Trust, had no net buying or selling in Thursday’s session, maintaining its holdings of 975.7 tonnes of gold.
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