Each ounce of gold rose by nearly $50, and all three major Wall Street indexes hit new highs thanks to the Fed's interest rate decision.
The spot price of gold on the world market reached a new record high on March 20th, at one point touching $2,210 per ounce. The previous record was $2,195 on March 8th.
Gold investors breathed a sigh of relief after the US Federal Reserve (Fed) maintained its forecast of three interest rate cuts this year following its policy meeting. Gold prices are sensitive to interest rates because the asset does not pay a fixed interest rate.
World gold prices surged on March 20th. Chart: Goldprice
Yesterday's Fed decision generated renewed buying interest in the market. Prices surged as investors began anticipating a Fed interest rate cut starting in June. The CME FedWatch interest rate tracker now shows a 60% probability of a June rate cut, higher than the 50% probability before the Fed's press conference.
The US stock market also rallied. At the close of trading on March 20th, the S&P 500 index rose 0.9%, reaching a new high of 5,224 points. The DJIA increased 1% to a record high of 39,511 points. The Nasdaq Composite hit an all-time high of 16,369 points.
Nine out of eleven sectors in the S&P 500 index closed higher yesterday. Five of those sectors rose more than 1%. The consumer discretionary sector saw the strongest gain, rising 1.5%.
US stocks surged towards the end of the session, as investors welcomed the Fed's policy decision and economic forecasts. The agency kept its benchmark interest rate unchanged and projected three more rate cuts this year. Prior to the meeting, many investors had worried that the Fed would cut rates less frequently, due to recent rising inflation figures.
"Accelerating inflation is a cause for concern. But Powell remains undeterred. Investors breathed a sigh of relief because the Fed still plans to cut interest rates three times this year. This has boosted the market and risk appetite," said David Russell, Director of Market Strategy at TradeStation.
Financial stocks rose following the Fed's decision, driven by expectations that interest rate cuts this year will help the US economy continue to grow. American Express shares rose 2.8%.
The tech giants continued to lead the market as investors bet they would benefit most from falling interest rates. Alphabet, Amazon, Microsoft, and Nvidia all rose more than 1%. Meta Platforms gained 1.9%. The strongest performers were Apple and Tesla, with gains of 1.5% and 2.5%, respectively.
Ha Thu (according to Reuters, Kitco)
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