Did the fight for the decline, the $ 1.9 billion stimulus package extinguish the golden aura?

Gold price today March 14: Negative sentiment dissipated, did gold end the darkest days? TGVN. The negative sentiment in the gold market is gradually diminishing and a lot of qualitative information has been received …

The price of gold is expected to fluctuate around a low of $ 1,680 / ounce in the near term. (Source: Forbes)

Update the price of gold today

At the 1-week peak, the highest level since March 3 of $ 1,739.63 / ounce in a fairly short time, the global gold price quickly ‘lost’ after US President Joe Biden signed and issued a Covid-19 bailout bill worth $ 1.9 billion and the yield on US Treasuries rose thanks to more optimistic-than-expected data on unemployment in the country.

As a result, the global spot price of gold in Kitco fell again, 21.9 USD (1.27%). 1,701.2 – 1,702.2 USD / ounce at 2:50 PM on March 12 (Vietnam time). The $ 1,700 support level is in danger of breaking. However, just a few hours later, prices reversed and rose, ending the week with a rally session, closing at 1727.9 – 1728.9 USD / ounce.

At the end of the session on 3/12, following the global crash, the SJC gold price continued to fall at the beginning of the session, declining by tens of thousands to several hundred thousand dong / tael in most stores. However, the domestic price of gold is still quite far from the world gold price, currently around 7.5 million dong / tael higher than the world gold price (converted to the USD exchange rate in Vietcombank at the time of the reference: 1 USD = 23,140 VND)

In the city. In Ho Chi Minh City, Saigon Jewelry Company declined, traded SJC gold price at 55.20 – 55.60 (buy-sell), 200,000 dong / tael less in buy and sell directions compared to the morning session. The difference in the sale price is greater than the purchase price of 400,000 dong / tael.

In Hanoi, the price of SJC gold in the Bao Tin Minh Chau system also decreased following the general trend, currently listed at 55.25 – 55.59 Million VND / tael, 170,000 VND / tael less in the afternoon of purchase and 180,000 in the afternoon of sale, compared to the same opening session in the morning. Gold price 999.9, Dragon Thang Long gold brand is also in a downtrend, currently included in 51.66 – 52.31 million / tael.

Why is the position of gold threatened?

Investors have just received information that President Biden enacted the largest economic rescue package in the history of the US economy on the morning of March 12. The president of the United States also said he was working to accelerate vaccination against Covid-19, as well as to bring the country closer to normal on July 4. This law is expected to help create more momentum for America’s economic recovery, but also increase predictions about inflation.

The 10-year US Treasury yield rose again slightly this session. That move has helped stabilize the dollar and is removing a “halo” from gold. The USD index, a measure of the dollar’s strength against rival currencies in the currency basket, rose 0.48% to 91.86. Therefore, the market is forecasting that the price of gold will fluctuate around a low of $ 1,680 / ounce in the near term. And a higher yield environment could halt a significant rally in the precious metal.

Some experts predict that in the coming time, gold is likely to fluctuate in the range of $ 1,700-1,800 / ounce when the market tries to find a balance of returns. Furthermore, investors are also awaiting the latest information from the US Federal Reserve (Fed) meeting, which is expected to take place next week to learn more about the direction of monetary policy.

In fact, the latest report shows that the number of Americans filing for unemployment benefits for the first time fell to its lowest level in four months last week. This better-than-expected news lifted US 10-year Treasury yields above 1.5%, while the dollar index left its one-week lows.

The president of the European Central Bank (ECB), Christine Lagarde, recently announced that the ECB kept the interest rate unchanged and, at the same time, predicted that by 2021, the regional economy that uses the euro will grow by 4%, well that the previous forecast. 3.9%.

Positive information from the major economies led the market to believe that the world economy would recover soon. Consequently, financial investors tend to reduce the need to take refuge in gold, put equity capital and other financial investment channels … by making gold overshadowed, the need to own gold has decreased significantly.

Meanwhile, according to senior analyst Jim Wyckoff Kitco Metals, bond yields have risen in recent weeks due to concerns about the possibility of hyperinflation, amid the world’s major economies have expanded their economic support policies in the past year, to overcome unprecedented difficulties caused for the Covid-19 pandemic.

Hence, gold has long been considered a hedge against inflation, especially in the face of large-scale stimulus measures. Normally, when the big economic stimulus packages are launched, gold will tend to rise in price due to the increasing demand for “safe haven”. However, that position has been threatened this year when higher bond yields, which translate into higher opportunity costs of holding gold, even many investors have decided to sell gold, buy bonds.

America pumped money, inflation was “exported” to the world

Thus, including the $ 1.9 billion rescue package signed by United States President Joe Biden, so far the total amount of money the United States has released to minimize the impact of the Covid-19 pandemic. and the economic recovery amounts to 5,000 billion dollars. , more than the amount spent in any world war.

It is estimated that, if not the United States, it is difficult for another country to spend such a large amount of money without going bankrupt, but because the United States pumps money, inflation is “exported” to the whole world.

With the No. 1 position, the USD is a worldwide trading instrument, oil trading, payment and cross-border exchange … Also thanks to this position, the US can comfortably distribute the relief money, without worrying about that financial income is not enough, even rising inflation is not too worrying.

The fact also shows that in the last 20 years, the American money supply has multiplied by 4, especially since the financial crisis of more than 10 years ago. Meanwhile, the country’s inflation rate for the past 10 years has been stable below 4% and has been regularly below the 2% target from 2012 to now. The above point of view and reality, combined with the goal of helping people and getting the economy back, have always made Democrats and Republicans waste their money bravely.

However, with other countries, inflation becomes a risk to face. Because when the United States pumps money, it will pressure the dollar to fall, causing many countries to also find ways to devalue their currencies and relax their policies so as not to lose.

The more money circulates in the economy will cause an escalation in the prices of raw materials. The real estate market, the stock market also continuously increased strongly, not only because of the excess money in the economy, but also because the amount of foreign investment will help drive up asset prices. Meanwhile, inflationary pressure will build and become increasingly dangerous if not controlled soon.