Update gold price today and future forecast

The US Federal Reserve (FED) decided to increase interest rates by 0.25 percentage points. Accordingly, the basic interest rate in the US is up to 5.25-5.5% - the highest level since 2001 until now.

However, because the FED announced to leave the door open to increase or not raise interest rates in the near future, the USD did not appreciate compared to many other foreign currencies. This helps the gold price stand firm today.

Meanwhile, analysts believe that from now until the end of 2023, the FED will stop raising interest rates because the reduction in money supply and tightening lending conditions are causing inflation in the US to cool down.

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Edward Moya, an analyst at Foreign Exchange Trading Company OANDA (USA), said that although the Fed is leaving interest rate options open, it is unlikely to raise interest rates again. Since then, many people think that in the future the dollar will depreciate, creating motivation for the gold price to heat up.

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Gold was also supported as many Asian and European stock markets fell. US stocks also performed less positively in the session 27/7.

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The market is considering the view of US Federal Reserve Chairman Jerome Powell whether to continue to pursue tightening or loosening monetary policy in the context that US inflation has cooled down recently. .

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Accordingly, gold can rise above the threshold of 2,000 USD/ounce. Demand for precious metals remains high amid economic and political uncertainty around the world.

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According to Reuters, gold prices rose as the dollar and bond yields fell ahead of the Fed rate hike news and Chairman Jerome Powell's comments.

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“Markets are waiting for a pause in monetary tightening for the rest of the year, while Fed officials can 'hit the mark,'” said Yeap Jun Rong, chief market strategist at IG. defy this view with the possibility of a rate hike in September or November.”

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Traders expect rates to remain in the 5.25-5.5% range in 2023, and 35% of them believe there is still a chance rates will rise again before next year, according to a report. CME's Fedwatch.

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Gold is very sensitive to rising interest rates because it increases the opportunity cost of owning a non-yielding asset like gold.

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Tim Waterer, head of market analysis at KCM Trade, said: “If Chairman Powell suggests that interest rates may have peaked, this would signal good news for prices. Gold has rallied in recent weeks.”

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The dollar and US government bond yields fell from 2-week highs, supporting gold prices.

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Along with keeping an eye on the inflation threat, the US Central Bank has adopted an upbeat tone as it sees the economy expanding at a moderate pace.

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Adam Button, chief currency strategist at Forexlive.com, noted that, interestingly, the Fed did not adjust its view on inflation as it cooled sharply in June with growth at its slowest pace in two years. .

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The Fed also emphasized that its future decisions will depend on the data. In the press conference after the central bank's decision to raise interest rates by 25 basis points, Fed Chair Powell mentioned the possibility of continuing to raise or keep rates unchanged at the September meeting without mentioning a cut in the future. this year. He emphasized that the Fed will consider cutting interest rates if there is more evidence that inflation has fallen sharply.

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Talking about the impact of monetary policy on gold in the near term, Edward Moya, senior market analyst at OANDA, thinks the precious metal will remain range-bound until October when the market is certain that the Fed will stop its tightening route. At that time, gold will take off.

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Looking to the longer term, in his latest research note, Greg Shearer, JPMorgan Chase's managing director of global commodities research, said he expects the Fed to begin cutting rates by the second quarter of 2024. . impetus" for gold, with gold prices averaging around $2,012/oz in the second half of this year.

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Shearer forecasts, by the fourth quarter of 2024, the average price of gold will be about $ 2,175 per ounce. This expert also thinks that prices can rise even higher if the US economy falls into a recession. Shearer noted that the deeper the thinking, the more aggressively the Fed will have to cut rates, which should support gold.

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Along with retail investor interest, JPMorgan sees a future in gold as central banks continue to add gold to their reserves and countries step up diversification away from the dollar. USD and hedge against increased geopolitical risks.

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The gold market is maintaining an assured strengthening as the US Federal Reserve is reviewing its monetary policy futures based on economic data. After the central bank's decision to raise interest rates by 25 basis points,

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Chairman Jerome Powell said the Open Market Committee (FOMC) could continue to raise interest rates in September and leave rates unchanged until the end of the year.

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Gold markets were unaffected by Powell's neutral remarks, remaining near session highs. Some analysts believe that gold continues to rise strongly as investors expect more clarity on monetary policy at the press conference.

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While the US central bank leaves options open, many economists and market analysts expect this to be the last rate hike in this tightening cycle.

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Some analysts, like Thorsten Polleit, chief economist at Degussa, argue that reducing the money supply and tightening lending conditions in the US will help slow the pace of inflation. "From this point of view, it looks like we've hit a high in the current rate cycle - and the next rate hike will be down," he said.

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Edward Moya, senior market analyst at OANDA, said the Fed is not expected to raise interest rates again, and the deflationary process will continue due to the weakening economy and impact from credit conditions. tightening use. He predicts gold prices could remain range-bound until November.

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In other precious metals markets, silver rose 0.9% to $24.92 an ounce, platinum was steady at $964.60, while palladium lost 1.8% to $1,261.13 .

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The Fed raised interest rates by 0.25 percentage points, raising the policy rate to a 22-year high and leaving the door open for another rate hike.

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While the consumer prices report for June 2023 showed that US inflation has fallen to 3% from last year's peak of 9.1%, Fed policymakers continue to express concerns about core inflation, excluding food and energy, which falls more slowly

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Demand for precious metals remains high amid economic and political uncertainty around the world.

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The biggest chance for gold to hit new record highs is when the Fed announces the end of its tightening cycle, said Matt Simpson, market analyst at financial services firm City Index. and no recession is imminent.

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Following the data, the dollar index rose 0.8% against its rivals, making gold more expensive for holders of other currencies. Yields on 10-year US bonds rose to two-week high..

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Some Fed watchers are thinking the central bank is now done with its rate hike cycle, while others think the Fed will make another rate hike in November.

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According to Shah, if recession fears materialize, gold futures prices will rise. In this scenario, gold can reach $2490/ounce. That number would be 22% above the nominal all-time high (reached in August 2020) and close to that number in real terms. However, it would be 28% below the all-time high reached in 1980.

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There are early signs that sentiment is starting to change, Mr. Artigas said. He added that the gold market remains in a wait-and-see mode as the Fed is keeping options open regarding its monetary policy.