The Fed keeps interest rates unchanged, causing gold prices to surge.

Last night, in the US market, the Federal Reserve (FED) announced it would keep interest rates stable. This time, the FED sent a clear signal that it has ended its aggressive interest rate hike campaign and anticipates a series of cuts in 2024.

Accordingly, the Fed kept the federal funds rate unchanged in the range of 5.25% - 5.5%, the highest level since 2001. This is the first time since March 2021 that policymakers have forecast no further interest rate increases.

Immediately after this information was released, the US stock market and gold prices heated up simultaneously.

The Fed kept interest rates unchanged, and gold prices rose as expected (Figure 1). — Immediately after the FED announced it would keep interest rates unchanged, world gold prices surged, helping SJC gold prices regain the 74 million VND/ounce mark. (Illustrative image)

World gold prices surged dramatically.

Gold prices rose more than 1% on Wednesday as the US dollar index and Treasury yields fell after the Fed marked the end of its interest rate hike cycle.

Spot gold prices rose 1.3% to $2,004.79 per ounce at 2:34 p.m. ET (1934 GMT). By the close of trading, the precious metal had surged to $2,030.3 per ounce.

David Meger, director of metals trading at High Ridge, said: “The Fed’s acknowledgment that inflationary pressures continue to ease has raised expectations of interest rate cuts, causing yields and the dollar to fall sharply, leading to an increase in gold and silver.”

"We believe that the current upward trend in gold is a sustainable price increase," David Meger said optimistically about the precious metals market.

The dollar index fell 0.6% following the Fed's decision, making gold cheaper for overseas buyers. Yields on 10-year US Treasury bonds extended their retreat.

The yield on 10-year Treasury bonds hit its lowest level since August after the Fed kept interest rates stable for the third consecutive meeting, paving the way for three more rate cuts in 2024. The 10-year Treasury yield fell 19 basis points to 4.016%.

According to the CME Fedwatch tool, traders are currently pricing in nearly a 60% chance that the US will cut interest rates in March 2024.

Lower interest rates increase the attractiveness of holding zero-interest gold bullion.

Fed Chairman Jerome Powell said inflation has eased while unemployment has not risen significantly, and the full impact of tightening may not yet be felt.

Data showed that U.S. producer prices were unexpectedly unchanged in November, suggesting that factory inflation continued to fall.

The trajectory of gold could also be influenced by the policy meetings of the European Central Bank and the Bank of England on Thursday.

SJC gold regains the 74 million VND/ounce mark.

The sharp rise in global gold prices has fueled the domestic market. From the moment they opened, jewelry stores simultaneously adjusted their gold prices upwards significantly.

At Saigon Jewelry Company (SJC), the price of SJC gold is currently trading at: 73.20 million VND/ounce - 74.20 million VND/ounce, an increase of 400,000 VND/ounce, equivalent to 0.54% compared to the end of yesterday.

As can be seen, the price of SJC gold is increasing at a much slower rate than world gold prices, but it has still managed to regain the 74 million VND/ounce mark.

At Doji Group, the price of SJC gold is currently being traded at: 73.10 million VND/ounce – 74.20 million VND/ounce, an increase of 300,000 VND/ounce for the buying price and an increase of 400,000 VND/ounce for the selling price.

Phu Nhuan Jewelry Company (PNJ) adjusted the price of SJC gold, increasing it by 400,000 VND/ounce to 73.20 million VND/ounce - 74.20 million VND/ounce. At Bao Tin Minh Chau, the price of SJC gold increased by 420,000 VND/ounce for buying and 400,000 VND/ounce for selling, reaching 73.35 million VND/ounce - 74.20 million VND/ounce.

Non-SJC gold prices are adjusting at an inconsistent pace, with some areas experiencing sharp increases while others see only slight increases.

At Bao Tin Minh Chau, the price of Thang Long gold is trading at 60.88 million VND/ounce – 61.98 million VND/ounce, an increase of 500,000 VND/ounce in both buying and selling prices. At PNJ Company, the price of PNJ gold only increased by 120,000 VND/ounce to 60.5 million VND/ounce – 61.60 million VND/ounce.

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