Chinese stocks, Middle East tensions push gold prices up

Uncertainties in the Chinese stock market and tensions in the Middle East between Iran and Saudi Arabia are pushing up demand for the precious metal.

Spot gold opened today up 0.6% to $1,080.43 an ounce. By 7:45 a.m. (Hanoi time), each ounce of gold reached $1,077.4. This price, converted at the bank exchange rate, is about VND29.2 million per tael (excluding taxes and fees). Yesterday, the domestic market closed the day at VND32.81-32.87 million per tael.

Gold prices increased in the first sessions of the year due to international economic and political instability. Photo: Anh Quan.

The precious metal even rose 2.2% to a four-week high yesterday after news of manufacturing contracts signed in China for December.

"More weak signals from China make gold prices more optimistic. However, investors still need more evidence to be confident in the price of this precious metal in the long term," said Julius Baer - expert Carsten Menke.

The 7% drop in Chinese stocks in the first session of the month raised global concerns about growth momentum and somewhat affected European and US stocks.

Chinese stocks closed mixed. "The first resistance zone for gold is between $1,083 and $1,087, with the next upside move towards $1,100," MKS Group said in a note.

Gold bars, often seen as an alternative investment during political and economic uncertainty, are getting some support. Political tensions between Iran and Saudi Arabia over the weekend are also contributing to the price increase. The execution of a Shiite parishioner is fueling riots across the border between Iran and Saudi Arabia. Saudi Arabia has now announced airspace closures and economic sanctions against Tehran. Last year, gold prices fell 10% on concerns about US interest rate hikes.

Along with gold, silver prices also rose 0.6% to $13.95 an ounce after ending the year down 11.7% in 2015. Platinum also rose 0.9% and palladium rose 1.5%.

According to VNE