Global gold prices plummet by over $100 in a widespread sell-off; experts call for urgent interest rate cuts by the Fed.

According to World & Vietnam Newspaper , at 7:00 PM on August 6th ( Hanoi time), the world gold price traded on the Kitco exchange at $2,412.00 per ounce , an increase of $0.60 compared to the previous trading session. The December gold futures contract increased by $8.70, trading at $2,453.10.

This sell-off, described as one of the worst since 2022, was fueled by growing fears of an impending recession in the US economy . Recent economic data has reignited recession concerns. Last week's jobs report showed a significant weakening of the US labor market, with the unemployment rate soaring to 4.3%, the highest level since October 2021. If the US economy falls into recession, it would prompt the Federal Reserve (Fed) to cut interest rates sooner. Some economists predict the Fed will be forced to cut interest rates more aggressively to support the sluggish economy.

According to CME's FedWatch tool, traders currently predict a 63% chance of an interest rate cut in September. Lower interest rates reduce the opportunity cost of holding non-yielding gold.

Former Fed economist Claudia SahmSahm, author of the "Sahm ​​Rule," commented on Bloomberg TV that while the US may not yet be in recession, the risk is very close. This assessment further unsettled investors and contributed to the market-wide sell-off.

However, towards the end of the session, when gold prices fell to a one-day low of $2,403.80 per ounce, the market saw a slight recovery as some investors viewed the drop as a buying opportunity.

The precious metals market has undergone a significant correction amid widespread selling, but its underlying drivers remain strong: ongoing economic uncertainty and unresolved geopolitical tensions further reinforce gold's role as a safe-haven asset, making a price recovery entirely possible in the near future.

Domestic gold prices have fallen by millions of dong for both buying and selling.

The price of SJC gold bars dropped sharply to 77 million VND/ounce for buying and 79 million VND/ounce for selling. The difference between the buying and selling price increased to 2 million VND, up from 1.5 million VND yesterday.

Saigon Jewelry Company (SJC) listed the price of SJC gold bars at 77-79 million VND/ounce, a decrease of 1.3 million VND in the buying price and 800,000 VND in the selling price.

DOJI Group, Bao Tin Minh Chau... adjusted the price of SJC gold bars to around 77.1 - 79 million VND/ounce.

Phu Quy SJC Gold listed the price of SJC gold bars at 77.1 - 79 million VND/ounce (buying price - selling price), a decrease of 1.2 million VND/ounce in the buying price and a decrease of 800,000 VND/ounce in the selling price.

Based on the USD exchange rate at Vietcombank, each ounce of world gold is equivalent to approximately 73.5 million VND. The price difference between domestic and world gold is over 5 million VND.

Notable domestic news is that, after a temporary suspension, starting this week, Saigon Jewelry Company (SJC) is buying single-letter and dented gold bars at the same price as the currently circulating double-letter gold bars. SJC's decision to resume buying came after the State Bank of Vietnam granted processing quotas for the company's existing gold inventory.

Gold prices today, August 7, 2024: World gold prices 'lose' over $100, widespread sell-off, experts call on Fed to urgently cut interest rates.

The price of 9999 pure gold rings decreased in line with the price of SJC gold bars.

Each gold ring traded at Saigon Jewelry Company was priced at 76.15 - 77.45 million VND, down 100,000 VND compared to yesterday's closing price.

Bao Tin Minh Chau company listed the price of gold rings at 76.28 - 77.48 million VND/ounce (buying price - selling price).

Experts are urging the Fed to cut interest rates urgently.

Monday's sell-off, coupled with weak economic data, fueled concerns that the Fed has kept interest rates too high for too long, pushing the U.S. economy into recession. "The market's concern is that the Fed is lagging behind and we're moving from a soft landing to a hard landing," worried Tracy Chen, a portfolio manager at Brandywine Global Investment Management .

Nobel Prize-winning economist Paul Krugman also called for an emergency interest rate cut following the panic sell-off in stocks. "I'm not calling for interest rate cuts between meetings, as that could signal panic, but if it's really necessary, then an emergency cut should be made soon."

"The Fed has been criticized for being slow to raise interest rates in the face of rising inflation. But their passivity toward falling inflation has lasted longer and could cause more harm," economist Krugman warned. Meanwhile, central banks in Canada and Europe have begun to ease policy.

Over the weekend, economists at Goldman Sachs raised the probability of a US recession next year from 15% to 25%, but reassured that the news wasn't entirely bad because the economy continues to appear "generally stable," there are no major fiscal imbalances, and the Fed has ample room to cut interest rates and can do so quickly if needed.

Concerns about a wider war in the Middle East remain a key focus of the market. Israel is preparing for a major attack from Iran and its proxies following last week's assassinations of key Hamas and Hezbollah military officials. Reports indicate trucks carrying surface-to-surface missiles are heading towards southern Syria. Convoys of weapons have been seen moving from Iran through Iraq to Syria. Reports also suggest Iran is moving missile launchers.

Gold is a safe haven during times of volatility. The precious metal tends to appreciate when risky assets plummet. Escalating geopolitical tensions and expectations of aggressive Fed interest rate cuts should have benefited gold. However, in the context of highly volatile markets, investors are selling yielding assets to offset losses from leveraged investments in risky channels.

George Milling-Stanley, an expert at State Street, believes that the current economic and political situation is supporting gold prices, which could reach $2,500-$2,700 per ounce if the US dollar continues to weaken due to the Fed's interest rate policy.

Contrary to the above view, experts predict that gold prices may continue to fall in the near future, but the long-term upward trend of this precious metal remains, and recent price drops are opportunities for investors to buy in.