Gold plunges after Fed Chairman’s speech

The price of gold in Vietnam declined on February 8 as global bullion prices plummeted after Jerome Powell, Chairman of the US Federal Reserve (Fed), sent a message that interest rates may increase further in the future to curb inflation.
Customers buy gold at PNJ store. (Photo: SGGP)

Customers buy gold at PNJ store. (Photo: SGGP)

At noon on March 8, in Ho Chi Minh City, Mi Hong Gold Company in Binh Thanh District listed SJC gold price at VND65.7 million per tael for buying and VND66.5 million per tael for selling, down VND300,000 in the buying rate and VND400,000 in the selling rate compared to the previous day. Meanwhile, larger gold trading companies saw smaller decreases. For instance, SJC Company reduced gold prices by VND250,000 for both buying and selling rates, to VND65.75 million per tael for buying and VND66.45 million per tael for selling.

At the same time, in Hanoi, Phu Quy Group bought SJC gold at VND65.8 million per tael and sold it at VND66.5 million per tael, decreasing by VND200,000 in both buying and selling rates.

Gold price traded in the Asian market on the morning of March 8 continued to fall to US$1,810.98 an ounce, about $3 an ounce lower than the closing price in the US. After conversion, this price was equivalent to about VND51.23 million per tael, a decrease of nearly VND1 million compared to the previous day. However, the losing momentum of domestic gold was less than half of the decrease in the global gold price. Thus, the current SJC gold price is about VND15.3 million per tael higher than the global gold price.

According to international experts, with the warning given by the Fed Chairman, if inflation continues to increase in the future, interest rates may climb higher than policymakers previously expected. This development is not favorable for the gold price as gold is a zero-yield asset. This makes investors worry and sell gold. Along with Powell's tough message, the US dollar price strengthened sharply, causing pressure on the precious metal. Specifically, the US Dollar Index, which measures the strength of the US dollar against a basket of six major currencies, rose by more than 1 percent, reaching 105.6 points.

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