Gold market enters a more stable phase

Gold prices have pulled back after a rapid rally, exposing market impediments like speculative sentiment and supply-demand mismatches, while setting the stage for a stronger upcycle ahead.

- By Hazy Tran

Gold has likely found a short-term peak, and consolidation time may be required

(Photo: Le Toan)

Domestic gold prices have been on a sustained downtrend since mid-April, with relatively narrow fluctuations. As of May 5, the selling price retreated to $6,600 per tael, marking a four-month low. This represented a decline of more than $400 compared to early April, and nearly $800 from the record high of over roughly $7,600 per tael recorded earlier this year.

Last year, the gold market repeatedly set new highs on dozens of occasions, creating a prevailing sentiment that the drivers behind the rally remained intact into this year.

However, Tran Trong Duc, founder and CEO of Virtus Prosperity, believes that in the next 3-6 months, a return to previous peak levels is unlikely.

"Many global investment funds have revised their forecasts. Some scenarios even suggest gold prices could fall below $4,000 per ounce, implying a further downside of around 10 per cent from current levels," he said.

As gold prices correct sharply, Duc cautioned against rushing in, particularly through all-in positions or leveraged trades, given the elevated risks.