Gold price today (July 27): Stable after the decision of the Fed
The gold market stabilized and reacted slightly after the US Federal Reserve (Fed) decided to raise interest rates by 25 basis points at its July meeting, bringing the federal funds rate to between 5.25% and 5.25 basis points. 5.50%.
US interest rates are currently at a 22-year high. However, analysts noted that the latest monetary policy statement was essentially unchanged from last month's meeting as it continued to focus on bringing inflation down to the 2% target.
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.
US interest rates are currently at a 22-year high. However, analysts noted that the latest monetary policy statement was essentially unchanged from last month's meeting as it continued to focus on bringing inflation down to the 2% target.
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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Analysts note that growing rifts in consumption are also supporting gold prices. The report notes that personal income has not kept pace with consumption. Specifically, personal income rose 0.3 percent in June, compared with a revised 0.5 percent gain in May. The data fell short of expectations as economists expected a gain of zero. 5%. .
