Gold prices drop

1 min readJan 5, 20231:42 PM

In this article (5)

SJC gold price dropped 0.15% to VND67.2 million per tael Thursday morning.

Gold ring price gained 0.28% to VND54.35 million per tael. A tael equals 37.5 grams or 1.2 ounces.

Global spot gold was up 0.1% at $1,856.11 per ounce, aided by a softer dollar, while market participants braced for U.S. jobs data that could influence the Federal Reserve’s policy trajectory.

“Gold has had a good start to the year, helped by a weaker dollar and expectations that the Fed might slow its pace of rate hikes. Recession risks and central bank buying should also support bullion this year,” said Brian Lan, managing director at Singapore-based dealer GoldSilver Central.

“If the jobs data reflects that the rate hikes have taken a toll on the economy, then dollar might weaken further and benefit gold.”

Bullion is seen as a hedge against inflation and economic uncertainties, but higher interest rates tend to weigh on non-yielding gold.

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What this means

The nuanced movement in Vietnam's gold market, with SJC prices dipping while gold rings climbed, reflects a localised response amidst global shifts. The article highlights that global spot gold strengthened due to a weaker dollar, aligning with expectations of a potential Fed rate hike slowdown. Retailers of gold products, particularly those offering finished jewellery like gold rings, might find their local market more resilient to specific global price pressures. This contrasts with bullion, which is more directly tied to global trends and US economic indicators. The key risk for retailers is over-reliance on a single gold product category, given differing price trajectories. This situation is more complex than a simple price drop. Retailers must closely monitor upcoming US jobs data for its direct impact on dollar strength and subsequent gold price volatility.

Wei Zhang

Questions & Answers

What is influencing the global gold price rise currently?

Global spot gold increased, helped by a softer dollar. Market participants are also waiting for U.S. Jobs data which might affect the Federal Reserve's policy direction.

What factors could continue to support gold prices throughout this year?

A weaker dollar and expectations of slower Federal Reserve rate hikes are expected to help. Recession risks and increased central bank buying should also support gold prices this year.

How might upcoming U.S. Jobs data specifically impact the dollar and gold?

If the jobs data indicates that rate hikes have negatively affected the economy, the dollar might weaken further. This potential weakening of the dollar would then benefit gold prices.

What is the relationship between higher interest rates and the value of gold?

While gold is generally seen as a hedge against inflation and economic uncertainty, higher interest rates tend to put downward pressure on non-yielding assets like gold.

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