Gold prices surged and stocks soared after the Fed's decision to 'ease pressure'.

Gold prices surged and US stocks jumped as the dollar weakened following the Fed's decision to cut interest rates. This move is seen as having "relieved pressure" on the market, although the Fed remains cautious about monetary policy in 2026.

Gold and stock prices surged.

By 8:00 AM on December 11th, the spot gold price on the international market had risen by nearly $19 (+0.45%) to $4,248 per ounce, after a similar increase at the end of the December 10th trading session in New York (early morning of December 11th in Vietnam time).

Gold surged again after three weeks of pressure, as investors awaited the outcome of the Federal Reserve meeting, the Federal Open Market Committee (FOMC) statement, and Fed Chairman Jerome Powell's views on monetary policy in 2026.

Things didn't turn out as negatively as many feared. The Fed lowered interest rates while expressing caution about monetary policy in 2026, but it wasn't overly pessimistic.

Specifically, in the early hours of December 11th, the FOMC cut the key overnight lending rate by 0.25 percentage points, bringing it to around 3.5%-3.75% per annum. Commercial interest rates will therefore decrease, and more money will be injected into the economy .

The US dollar edged lower. The DXY index fell more than 0.2% to 98.58 points.

Gold prices surged following signals from the Fed. Photo: HH

Thus, the Fed cut interest rates as expected by the market, thereby dispelling concerns, albeit minor, that the US central bank might reverse its decision at the last minute. Previously, internal disagreements existed within the Fed amidst persistently high and rising US inflation. Inflation reached 2.8% in September, a sharp decrease from the 9.1% peak of 2022, but still higher than the 2% target.

According to signals from Fed members, the agency expects only one interest rate cut in 2026 after three cuts this year. Nevertheless, this signal has eased concerns among many investors about the potential for a hawkish stance from the US monetary policy-making body.

Following news of interest rate cuts from the Fed and expectations of further easing next year, US stocks surged. The Dow Jones Industrial Average jumped nearly 500 points (+1.1%). The broader S&P 500 index rose 0.7%. The Nasdaq Composite technology index gained 0.3%.

Other positive signs

The rebound in gold prices and the US stock market is also due to signals from the Fed and its chairman, Jerome Powell.

Notably, the Fed announced it would begin purchasing short-term bonds. The central bank stated it would buy $40 billion worth of Treasury bills starting December 12th. This helped ease pressure on the interbank market. Immediately afterward, short-term Treasury bond yields fell rapidly.

Earlier, gold prices were under significant pressure as the US financial market showed signs of sharply rising bond yields. According to a Bloomberg report published earlier this week, global bond yields have risen to their highest level since 2009, raising concerns that the cycle of interest rate cuts by major central banks may be nearing its end.

Long-term government bond yields have also risen to their highest level in 16 years, amid forecasts in the money markets reinforcing the view that the European Central Bank is likely to have little room left to further ease policy.

Even in the US, where the Fed is still expected to maintain its interest rate-cutting trend, the monetary policy outlook is believed to be volatile. Yields on 30-year US Treasury bonds have climbed back to multi-month highs as investors become more cautious about risks related to inflation, monetary policy, and fiscal discipline.

Investors are betting that the cycle of interest rate cuts – introduced last year to stimulate economic growth and which in the process propelled global stock markets to record highs, while also boosting bond prices – is gradually coming to an end.

In addition, the Fed also emphasized the weakening state of the US labor market in its statement, removing the previous phrase that the unemployment rate "remains low." This suggests that the Fed is shifting its focus to supporting growth rather than curbing inflation.

Another important signal is Powell's statement that the Fed needs to "wait and see" before taking its next step, thereby almost ruling out the possibility of the US central bank raising interest rates in the near future.

These decisions come as the Fed enters a sensitive phase. Powell is nearing the end of his second term and has only three meetings left before handing over the reins to a new leader. President Donald Trump has signaled that he will prioritize a candidate who supports low interest rates.

The market is placing strong bets on Kevin Hassett, Chairman of the National Economic Council, as a leading candidate for the next Fed chairman.

According to market forecasts, there is a 72% chance that Mr. Hassett will be chosen.

Thus, the Fed's signals are considered quite "dovish" for the global economy, financial markets, and commodities. Although the Fed signaled only one interest rate cut in 2026, according to CME's FedWatch, the market forecasts over a 77% probability that the Fed will cut rates two more times.

Pressure mounts: Gold price forecast for 2026. SJC gold and plain gold rings are under considerable pressure as world prices have been stalled at the $4,200 mark for the past few weeks and the USD/VND exchange rate has cooled down. World gold prices are predicted to experience another decline.

Source: https://vietnamnet.vn/gia-vang-bat-tang-chung-khoan-vot-len-sau-quyet-dinh-giai-toa-ap-luc-cua-fed-2471426.html