World gold prices hit a record high in Wednesday’s trading session (September 17) thanks to the momentum from the US Federal Reserve (Fed) lowering interest rates and forecasting further interest rate cuts this year…
But then gold prices turned sharply lower and the USD exchange rate turned green because the Fed forecast that it would only cut interest rates once in 2026.
At 6:10 this morning (September 18) Vietnam time, the spot gold price in the Asian market increased by 4.1 USD/oz compared to the closing price last night in the US, equivalent to an increase of 0.11%, trading at 3,664.9 USD/oz – according to data from the Kitco exchange. Converted according to the USD selling rate at Vietcombank, this price is equivalent to 116.8 million VND/tael, down 1.2 million VND/tael compared to yesterday morning.
At the same time, Vietcombank website quoted USD price at 26,147 VND (buy) and 26,457 VND (sell), down 11 VND at each end of the price compared to yesterday morning. Since the beginning of the week, the USD price listed at this bank has decreased 19 VND at each end of the price.
At the end of Wednesday’s session in the New York market, the spot gold price stopped at 3,660.8 USD/oz, down 31.4 USD/oz compared to the closing price of the previous session, equivalent to a decrease of 0.85%.
During the session, spot gold price reached 3,707.4 USD/oz – an unprecedented high in history.
On the COMEX floor, the price of gold for December delivery decreased 0.2%, closing the session at 3,717.8 USD/oz.
In an expected move, the Fed cut the federal funds rate by 0.25 percentage point, bringing the benchmark rate to 4-4.25%.
The Fed’s updated “dot plot” interest rate forecasts show the world’s largest central bank could cut rates two more times this year. The forecast reflects the Fed’s less concern about rising inflation risks and more concern about weakening economic growth and rising unemployment.
“Gold prices are hitting new records, and that is a result of expectations of a lower interest rate environment going forward, starting with today’s 0.25 percentage point rate cut,” precious metals trader David Meger of High Ridge Futures told Reuters.
This is the first rate cut by the Fed since December last year. In 2024, the Fed had three consecutive rate cuts in the last four months of the year, with a total reduction of 1 percentage point.
A lower interest rate environment is good for non-interest bearing assets like gold, as it reduces the opportunity cost of holding them. The main driver of gold’s recent rally has been expectations of a Fed rate cut.
In addition, the upward trend in the price of this precious metal since the beginning of the year has also been supported by central banks’ demand for gold, the devaluation of the USD, as well as investors’ need for shelter amid tariff and geopolitical instability.
World gold price movements over the past 6 months. Unit: USD/oz – Source: Trading Economics.
Gold prices have risen about 40% this year. Analysts expect the precious metal to trade in the $3,600-$3,900/oz range in the short to medium term, with the potential to test the $4,000/oz mark next year if geopolitical uncertainty persists.
Explaining the decline in gold prices after setting a record in the session on September 17, some experts mentioned profit-taking pressure at the peak price and the Fed’s forecast to cut interest rates only once in 2026. This forecast of the Fed is less than the market’s expectation that the central bank will cut interest rates 2-3 times next year.
In a post on the precious metals website Kitco News, technical analyst Gary Wagner said that despite the recent decline in gold prices, the fundamentals supporting gold prices remain strong. “Current models show that gold has a lot of upside potential and could reach $3,880/oz before the end of the year if the Fed continues to cut interest rates as expected,” Wagner wrote.
The US dollar rebounded after the Fed meeting, with the Dollar Index closing at 97.02 points, up 0.4% from the previous session. However, the index has fallen more than 0.5% in the past five sessions due to pressure from expectations of a Fed rate cut.
The world’s largest gold ETF, SPDR Gold Trust, sold a net 4.3 tonnes of gold on Wednesday, reducing its holdings to 975.7 tonnes, according to its website. It had previously bought a net 6 tonnes of gold on Monday and Tuesday.
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