Gold prices fall, investors hold their breath waiting for the FED's move

Labor reported, according to Kitco - The US Federal Reserve (FED) began a two-day meeting of the Federal Open Market Committee (FOMC) on Tuesday and ended on Wednesday (US time). Many people predict that the FED will keep interest rates unchanged.

According to CME's FedWatch tool, there is a 94.6% chance the Fed will maintain current interest rates and a 5.4% chance they will cut rates.

At the conclusion of this week's FOMC meeting, the Federal Reserve will issue a statement and Chairman Jerome Powell will hold a press conference.

Finance - Banking - Gold price drops, investors hold their breath waiting for the FED's move — Investors hold their breath waiting for the FED's move.

According to UBJ, "forecasts from futures markets show a high probability of no change in interest rates, with a low probability of a rate cut.

Since July 2023, the FOMC has maintained its target for the federal funds rate in a range of 5.25% to 5.50%. This steady stance reflects the Fed’s cautious approach, especially in light of recent inflationary pressures.

Investors, however, will focus on the Fed's plans regarding balance sheet management.

It appears that the vast majority of investors will be waiting for the Fed's guidance before making major decisions about their portfolios, including their allocation to gold and US stocks.

Finance - Banking - Gold prices fall, investors hold their breath waiting for the FED's move (Figure 2). — Gold price fluctuation chart in the last 24 hours.

According to Kitco, the world gold price recorded at 1:30 p.m. today, Vietnam time, was at $2,325.77/ounce. The gold price this afternoon decreased by $6.64/ounce compared to yesterday's gold price.

Converted at the current exchange rate at Vietcombank , the world gold price is about 70,102 million VND/tael (excluding taxes and fees). Thus, the price of SJC gold bars is still 12,898 million VND/tael higher than the international gold price.

Spot gold price stood at 2,325 USD/ounce, compared to the same trading session yesterday, gold continued to decrease by more than 6 USD/ounce.

Precious metals continued to decline in price as investors are currently cautious ahead of the US Federal Reserve (FED) preparing to start its monetary policy meeting on Tuesday (US time).

Meanwhile, U.S. nonfarm payrolls data will be released on Friday. The Fed is expected to keep its benchmark interest rate steady at 5.25% to 5.5% at this meeting. According to the CME FedWatch tool, investors have reduced their expected rate cuts this year from two to just one.

Gold Price Forecast

Before last week's decline, the previous five weeks of gains saw gold hit a record high of $2,431.29 on April 12, amid heavy central bank buying and demand from Chinese retail investors amid a weaker yuan.

“Demand from China may decline seasonally by mid-2024, but structurally stronger consumption trends through retail and the PBOC (People’s Bank of China) will support higher gold prices,” Citi said in a note.

Marc Chandler, CEO of Bannockburn Global Forex, believes that gold prices will move in a positive direction, possibly increasing to $2,370/ounce in the coming days.

He noted that the recent disappointing US jobs report could cause the US dollar and US bond yields to fall, while lifting gold prices.

Barchart senior market analyst Darin Newsom is among the few experts predicting a decline in gold prices this week.

In a recent note, Citi said that Chinese demand may decline seasonally by mid-2024, but stronger retail consumption and the People’s Bank of China will support higher gold prices. The bank forecast that gold could hit $3,000 an ounce in the next 12-15 months, according to Industry and Trade.

KHANH LINH (t/h)

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