Gold prices rise sharply as Fed signals policy pivot

12/14/2023 10:39 Nhat Linh Print article

ANTD.VN - The Fed's decision to keep interest rates unchanged and predict three cuts next year has lifted all the burden off the gold market, causing it to immediately increase sharply.

This morning, domestic gold prices increased sharply.

Specifically, as of 10:30 a.m., Saigon Jewelry Company (SJC) listed the price of SJC gold at 73.40 - 74.62 million VND/tael, an increase of 600 thousand VND/tael in both buying and selling prices compared to the closing price of yesterday's trading session.

At DOJI, the increase was 300 thousand VND/tael for buying and 400 thousand VND/tael for selling, bringing the price of SJC gold to 73.10 - 74.20 million VND/tael. Phu Quy increased 500 thousand VND/tael for buying, increased 600 thousand VND/tael for selling, listed at 73.40 - 74.40 million VND/tael; Bao Tin Minh Chau also listed at 73.40 - 74.28 million VND/tael...

Non-SJC gold increased even more strongly, with an increase of 500 - 600 thousand VND per tael. Of which, PNJ gold was listed this morning at 60.50 - 61.60 million VND/tael; SJC 99.99 rings were at 60.50 - 61.55 million VND/tael; Bao Tin Minh Chau's Thang Long Dragon Gold was 61.02 - 62.12 million VND/tael...

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Gold prices relieved of interest rate burden

On the world market, at the end of the trading session on December 13 (early this morning Vietnam time), the spot gold price also increased sharply with an increase of nearly 48 USD, up to 2,027 USD/ounce. Entering the Asian session, the precious metal continued to rise and is trading above 2,031 USD/ounce.

The main driver of gold prices is the US Federal Reserve's interest rate decision and its strong predictions of a pivot, the first since the tightening cycle began in March 2021.

The Fed left its benchmark interest rate unchanged at the end of its last FOMC meeting of the year, as expected. It also released updated economic projections in its Summary of Economic Projections (SEP). The latest projections show that central bank officials are almost unanimous in predicting rate cuts starting next year, with expectations for three cuts totaling 0.75%, which would bring the Fed funds rate down to around 4.6%.

Following the news, the USD fell sharply, with the USD Index, which measures the greenback's strength against a basket of six major currencies, losing more than 1.1 percentage points to around 102.8 points. The sharp decline in the USD also put pressure on gold, as the two assets are inversely correlated.

According to the CME FedWatch Tool, the market expects rates to move closer to 4% by the end of next year.

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