FED keeps interest rates unchanged, gold prices rise sharply

Last night in the US market, the US Federal Reserve (FED) announced to keep interest rates stable. This time, the FED sent a clear signal that they have ended the campaign of strong interest rate hikes and expected to make 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 forecasted no further interest rate increases.

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

Fed keeps interest rates unchanged, gold price increases normally, figure 1 — Immediately after the FED announced to keep interest rates unchanged, the world gold price increased sharply, helping SJC gold price regain the 74 million VND/tael mark. Illustrative photo

World gold price increased vertically

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 rate-hike cycle.

Spot gold rose 1.3% to $2,004.79 an ounce at 2:34 p.m. ET (1934 GMT). The precious metal later surged to $2,030.30 an ounce.

“The Fed’s recognition of continued easing inflation pressures has increased expectations of rate cuts, sending yields and the dollar sharply lower, leading to a rise in gold and silver,” said David Meger, director of metals trading at High Ridge.

“We believe the current uptrend in gold is a sustainable rally,” David Meger said, optimistic about the precious metals market.

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

The yield on the 10-year Treasury note hit its lowest level since August after the Fed held interest rates steady for a third straight meeting, setting the stage for three cuts by 2024. The benchmark 10-year Treasury note fell 19 basis points to yield 4.016%.

Traders are now pricing in a nearly 60% chance of a US rate cut by March 2024, according to the CME Fedwatch tool.

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

Fed Chairman Jerome Powell said inflation has eased without a significant increase in unemployment and the full impact of tightening may not yet be felt.

Data showed US producer prices were unexpectedly unchanged in November, suggesting factory inflation continued to ease.

Gold's trajectory could also be influenced by policy meetings of the European Central Bank and Bank of England on Thursday.

SJC gold regains the 74 million VND/tael mark

The sharp increase in world gold prices has brought heat to the domestic market. Right from the opening hours, jewelry stores simultaneously adjusted gold prices to increase sharply.

At Saigon Jewelry Company – SJC, SJC gold price is being traded at: 73.20 million VND/tael – 74.20 million VND/tael, up 400,000 VND/tael, equivalent to 0.54% compared to the end of yesterday.

It can be seen that the price of SJC gold has increased much slower than the world gold price but is still strong enough to regain the mark of 74 million VND/tael.

At Doji Group, SJC gold price is being exchanged at: 73.10 million VND/tael - 74.20 million VND/tael, an increase of 300,000 VND/tael for buying and an increase of 400,000 VND/tael for selling.

Phu Nhuan Jewelry Company – PNJ adjusted the price of SJC gold to increase by 400,000 VND/tael to 73.20 million VND/tael – 74.20 million VND/tael. At Bao Tin Minh Chau, the price of SJC gold increased by 420,000 VND/tael for buying and 400,000 VND/tael for selling to 73.35 million VND/tael – 74.20 million VND/tael.

Non-SJC gold prices have had inconsistent adjustment speeds, some places increased very strongly, some places only increased slightly.

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

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