Gold prices drop marginally
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SJC gold prices fell 0.15% to VND67 million ($2,805.70) per tael Thursday morning.
Gold ring prices gained 0.19% to VND54 million. A tael equals 37.5 grams or 1.2 ounces.
Gold prices were little changed in early Asian trade on Thursday, after bullion jumped more than 1% in the previous session following a retreat in the U.S. dollar and yields.
Spot gold held its ground at $1,786.92 per ounce.
Higher interest rates tend to increase the opportunity cost of holding gold as it yields no interest.
Market participants mostly expect a 50-basis point rate hike at the Fed’s final meeting of 2022 scheduled on December 13-14.
Questions & Answers
Q.Did all types of gold prices fall on Thursday morning?
Did all types of gold prices fall on Thursday morning?
No, SJC gold prices dropped by 0.15%, but gold ring prices actually increased by 0.19% to VND54 million. The market saw mixed movements for different gold products.
Q.What is the primary reason gold is seen as less attractive when interest rates rise?
What is the primary reason gold is seen as less attractive when interest rates rise?
Higher interest rates increase the opportunity cost of holding gold because gold itself does not generate any interest. Investors might prefer assets that offer a return.
Q.What is the significance of the upcoming Fed meeting for the gold market?
What is the significance of the upcoming Fed meeting for the gold market?
Market participants expect a 50-basis point rate hike at the Fed's December meeting. Such a hike could further impact gold's appeal due to increased opportunity costs.