What investors are more interested in from the outcome of this Fed meeting is how monetary policymakers will update their “dot plot” interest rate forecasts…
The world gold price surpassed the $3,700/oz mark for the first time in history in the trading session on Tuesday (September 16), as investors waited for a move to lower interest rates from the US Federal Reserve (Fed) this week. The giant gold fund SPDR Gold Trust net bought another 4 tons of gold.
At 6:00 a.m. this morning (September 17), the spot gold price in the Asian market increased by 2.2 USD/oz compared to the closing price on Tuesday in the US, equivalent to an increase of 0.06%, trading at 3,693.3 USD/oz – according to data from the Kitco exchange. Converted according to the USD selling rate at Vietcombank, this price is equivalent to about 118 million VND/tael, an increase of 600,000 VND/tael compared to yesterday morning.
At the same time, the USD price on Vietcombank’s website was 26,158 VND (buy) and 26,468 VND (sell), down 8 VND at each end of the price compared to yesterday morning.
At the close of last night’s session in New York, the spot gold price reached 3,692.2 USD/oz, up 10.7 USD/oz, equivalent to an increase of 0.3%, compared to the closing price of the previous session. This is the highest closing price ever for spot gold.
During the session, there was a time when spot gold prices reached an all-time high of approximately $3,703/oz.
On the COMEX floor, the price of gold for December delivery increased 0.1%, closing at 3,725.1 USD/oz.
“Global economic growth uncertainty and geopolitical risks continue to keep safe-haven demand high. However, the gold rally at the moment is largely driven by the prospect of an aggressive Fed rate cut,” Zain Vawda, an analyst at data and analytics firm Oanda, told Reuters.
The Fed’s two-day monetary policy meeting began on Tuesday. The Fed will announce its interest rate decision on Wednesday afternoon local time. This is considered the most important policy meeting of the Fed this year, the outcome of which could determine the direction of global financial markets in the coming time.
According to data from the CME exchange’s FedWatch Tool, the market is betting on a more than 95% chance that the Fed will cut interest rates by 0.25 percentage points at this meeting, and a nearly 5% chance that the Fed will cut interest rates by 0.25 percentage points.
With the possibility of a rate cut now considered certain, what investors are more interested in the outcome of this Fed meeting is how monetary policymakers will update their “dot plot” forecast of interest rates, in the direction of more or less interest rate cuts in 2025 than the previous forecast. According to the forecast updated 3 months ago, the Fed said there would be two interest rate cuts this year.
Under pressure from the prospect of lower Fed interest rates, the US dollar fell to a two-month low. The Dollar Index slid nearly 0.7% to close at 96.66. In the past five sessions, the currency has fallen nearly 1.2%, bringing its total decline since the beginning of the year to nearly 11%, according to data from MarketWatch.
US Treasury yields also fell for similar reasons, with the yield on the 10-year note falling slightly to 4.028%.
Both falling US Treasury yields and a weaker USD are positive factors for precious metals prices.
World gold price movements over the past year. Unit: USD/oz – Source: Trading Economics.
“Gold is being driven by a rapidly weakening US dollar. The greenback is at its cheapest since July,” said precious metals trader Tai Wong. However, he said it would not be surprising if some investors took profits at the current record levels, as caution is likely to build ahead of the Fed’s rate decision.
Gold prices have risen 41% this year. The new $3,600/oz level first appeared on the spot gold market on September 8, 10 days before the $3,700/oz level appeared. The $3,000/oz price level is set in March 2025, after the price of the precious metal increased 27% last year.
There are many factors supporting gold prices this year, including central banks’ net buying of gold, investors’ risk-off demand, and the prolonged weakness of the US dollar.
The world’s largest gold ETF, SPDR Gold Trust, bought a net 4 tonnes of gold on Tuesday, bringing its holdings to nearly 980 tonnes, according to data from the fund’s website. In the first two sessions of the week, the fund bought a net 6 tonnes of gold.
Leave a Reply