Gold prices plunge the most since early May

After suffering its first weekly decline since June last week, gold prices have been volatile this week, ending the week up nearly 1% from a two-week low.

However, overall for the week, gold prices still evaporated nearly 2.5% and this was the second consecutive week that the precious metal fell, in which last week marked the most disastrous week of gold prices since the beginning of May.

Market traders blamed the week's decline mainly on investment funds selling gold in the early sessions of the week, but the situation changed at the end of the week and the hunt for cheap gold by Asian investors pushed gold prices up again.

According to analysts, in the past two weeks, every time the gold price fell below $1,800/ounce, there was a strong wave of buying, especially in Asian markets, led by Shanghai, China.

Traders said investors in Shanghai were willing to pay a premium of about $14 for physical gold, compared with the usual $2-3.

In the last session of the week of September 16, after hitting the lowest bottom (1,761.94 USD/ounce) in two weeks (since August 26) in the New York market and before that even hitting the lowest bottom in 3 weeks in the Asian market, the gold price bounced back when investors were worried about the public debt crisis in the Eurozone, the sluggish growth of the US economy, and especially the hunt for cheap purchases by Asian investors.

At the end of this session, in the New York market, the spot gold price increased by 0.9% to close the week at 1,804.70 USD/ounce, lower than the price of 1,858 USD/ounce at the end of the previous week; while the gold futures price for December delivery increased by 33.30 USD to close the week at 1,814.70 USD/ounce, and also lower than the price of 1,859.50 USD/ounce at the end of the previous week.

Among other precious metals, spot silver closed the week at $40.03 an ounce; platinum recovered after falling to $1,762.28 an ounce - its lowest level since August 11 - and closed the week at $1,804.49 an ounce; while palladium also rose 1% to $727.73 an ounce.

Meanwhile, in the London market, the spot gold price fell to 1,794 USD/ounce, lower than the price of 1,851 USD/ounce at the end of last week.

Following the downward trend of gold prices, other precious metals such as platinum and palladium also fell, down to $1,798/ounce and $732/ounce, respectively, lower than the corresponding levels of last weekend, $1,842/ounce and $748/ounce.

The main reasons for the second consecutive week of gold price decline last week, according to analysts, were some positive news from Europe and the Eurozone, including the commitment of Eurozone leaders to keep Greece in the bloc.

Next, the Eurozone received strong support from major central banks around the world, including the US Federal Reserve (FED), the European Central Bank (ECB), the Bank of Japan (BOJ), the Swiss National Bank and the Bank of England (BOA), according to which these five banks pledged to coordinate to pump money into banks of European countries that are drowning in debt to help resolve the region's public debt crisis.

This news has boosted investors’ appetite for riskier assets and pushed them further away from the safe haven investment channel like gold. Until now, the all-time high of gold price is still $1,921.15/ounce, set on September 6, 2011.

However, according to experts, recently, gold prices have remained stable at high levels as investors continue to find safety in this investment channel in the context of slow global economic growth, escalating inflation and the sovereign debt crisis on both sides of the Atlantic has not really found a way out. In addition, gold has also benefited from recent conflicts and instability in the Middle East and North Africa.

And although gold prices have experienced their sharpest weekly decline since May, on September 15, British consultancy GFMS still predicted that gold prices would reach a record high of over $2,000 per ounce by the end of this year as investors continue to seek gold as a safe haven in the current turbulent and unstable economic times./.

(According to VNA/Vietnam+)