Despite Fed keeping interest rates unchanged, gold prices remain high

ANTD.VN - The Fed did not raise interest rates, but is expected to keep them high longer than expected. However, gold prices remained high, showing that the precious metal still retains its appeal.

This morning, domestic gold prices tended to decrease slightly, but remained at a high level. Specifically, at Saigon Jewelry Company (SJC), the price of gold bars early this morning did not fluctuate, remaining at 68.50 - 69.22 million VND/tael (buy - sell).

In particular, some other gold trading enterprises slightly decreased. For example, DOJI listed the price of the national gold brand early this morning at 68.40 - 69.30 million VND/tael, down 100 thousand VND per tael; Phu Quy 68.45 - 69.20 million VND/tael, down 100 thousand VND/tael for buying, down 50 thousand VND/tael for selling; Bao Tin Minh Chau 67.52 - 68.18 million VND/tael, down 50 thousand VND.

Meanwhile, the price of gold rings is still anchored at a high level. SJC rings are 57.05 - 58.00 million VND/tael; PNJ rings are 57.10 - 58.10 million VND/tael; Bao Tin Minh Chau round rings are 57.28 - 58.18 million VND/tael, a slight decrease of 50 thousand VND/tael for buying, a decrease of 10 thousand VND per tael...

In the world market, the spot gold price in the US market on September 20 (last night Vietnam time) fluctuated quite strongly. After the meeting of the US Federal Reserve (Fed), the gold price suddenly skyrocketed, at times almost touching 1,948 USD/ounce, but then adjusted back. This precious metal closed the trading session at nearly 1,930 USD/ounce, almost unchanged during the day.

Giá vàng vẫn khá vững dù Fed phát đi tín hiệu "diều hâu" ảnh 1

Gold prices remain stable despite the Fed's "hawkish" signals

The sharp moves in gold prices came as investors reacted to the interest rate decision and the message from the Fed's leadership after the September 20 policy meeting, which showed that the agency still maintained its "hawkish" stance.

Specifically, the Fed decided to keep the policy interest rate at the current level (5.25 - 5.5%), but supported a rate hike by the end of 2023 and continued to maintain tight monetary policy until 2024.

Twelve of the agency’s 19 policymakers support another rate hike in 2023 to ensure inflation continues to slow. The central bank also forecasts less easing in 2024, thanks to the strength of the economy and labor market.

At the same time, Fed policymakers also expect the policy rate to fall to 5.1% by the end of 2024, up from the agency's last forecast of 4.6% in June 2023. The Fed also forecasts the rate will then fall to 3.9% by the end of 2025 and 2.9% by the end of 2026.

In addition, the agency also forecasts inflation to fall below 3% in 2024 and return to 2% in 2026. However, the agency forecasts that the US economic growth rate will slow in 2024, to 1.5%, after adjusting the growth rate in 2023 to 2.1%.

Data released since the Fed's last meeting in late July 2023 have generally shown that the US labor market and consumer spending have remained stable despite rising interest rates, while core inflation has continued to decelerate.

Despite Powell’s hawkish stance, gold is holding its ground as markets see only a 50/50 chance of another rate hike this year, some analysts say, as there are still plenty of hurdles policymakers need to navigate.

Oil prices have risen about 30% since June 2023, while the resumption of student loan payments in October will weigh on consumer spending. The risk of a government shutdown in late September 2023 also weighs on the outlook for jobs and prices ahead of the Fed’s next meeting in late October.

Experts say that if the Fed is right about the economic outlook, interest rates could certainly stay higher for longer. However, many are skeptical of those forecasts, arguing that the real economy will be significantly weaker and that, despite that, core inflation will return to the 2% target more quickly, and interest rates will fall more quickly in 2024.

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