Gold prices edge up
In this article (5)
SJC gold prices 0.3% to VND67 million ($2,841.39) per tael Friday morning.
But gold ring prices declined by 0.37% to VND53.7 million per tael. A tael equals 37.5 grams or 1.2 ounces.
Global gold prices inched up but were bound for a weekly loss as the U.S. Federal Reserve projected higher interest rates for a longer period.
Spot gold rose 0.2% to $1,780.63 per ounce.
“Gold’s fall this week is in the aftermath of the Fed meet. Also, with recession risks rising, the U.S. dollar will emerge as the preferred safe haven,” said Ilya Spivak, head of global macro at Tastytlive.
The Fed on Wednesday raised interest rates by 50 basis points as expected, but Chair Jerome Powell said the central bank would deliver more hikes next year even as the economy slips towards a recession.
Although gold is traditionally known as a hedge against inflation and economic uncertainties, higher interest rates tend to dim bullion’s appeal by increasing the opportunity cost of holding the non-yielding metal.
Central banks in Europe followed the Fed in slowing the pace of interest rate increases but offered a similar stark message that financial conditions will continue to tighten even as economic performance deteriorates.
Questions & Answers
Q.What caused global gold prices to be bound for a weekly loss despite inching up on Friday?
What caused global gold prices to be bound for a weekly loss despite inching up on Friday?
Global gold prices were set for a weekly loss because the U.S. Federal Reserve projected higher interest rates for a longer period. This forecast tends to make holding non-yielding gold less appealing.
Q.How did the SJC gold prices and gold ring prices perform on Friday morning?
How did the SJC gold prices and gold ring prices perform on Friday morning?
SJC gold prices increased by 0.3% to VND67 million per tael on Friday morning. However, gold ring prices saw a decline of 0.37% to VND53.7 million per tael.
Q.Why did Ilya Spivak suggest the U.S. Dollar would become a preferred safe haven?
Why did Ilya Spivak suggest the U.S. Dollar would become a preferred safe haven?
Ilya Spivak stated that with rising recession risks, the U.S. Dollar would emerge as the preferred safe haven. This follows the aftermath of the Federal Reserve meeting.
Q.What is the traditional role of gold, and how do higher interest rates affect its appeal?
What is the traditional role of gold, and how do higher interest rates affect its appeal?
Gold is traditionally known as a hedge against inflation and economic uncertainties. However, higher interest rates tend to reduce its appeal by increasing the opportunity cost of holding the non-yielding metal.
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