Gold Prices Surge Above $2,300 as Fed Signals No More Rate Hikes
Global gold prices rebounded significantly, surpassing the $2,300 per ounce threshold on Wednesday and continuing to rise on Thursday morning (May 2), following signals from Federal Reserve Chairman Jerome Powell indicating no further interest rate hikes. Domestic gold prices remained stable after the holiday break, fluctuating by approximately $40 per ounce compared to yesterday’s levels.
Closing the US session, spot gold settled at $2,320 per ounce, marking a $33 per ounce increase or over 1.4% from the previous session’s close, according to data from the Kitco exchange.
As of approximately 10:00 AM Vietnam time today, spot gold in the Asian market traded at $2,322.6 per ounce, up $2.6 from the US closing price. Converted at the USD selling rate of Vietcombank, this price corresponds to approximately VND 71.2 million per ounce, an increase of VND 1 million per ounce from yesterday morning.
At the same time, Phu Quy Group listed SJC gold bars in Hanoi at VND 82.6 million per ounce (buy price) and VND 84.6 million per ounce (sell price), representing stability and a decrease of VND 100,000 per ounce, respectively, compared to yesterday morning.
Phu Quy’s 999.9 pure plain gold rings traded at VND 74.4 million per ounce and VND 76.1 million per ounce, an increase of VND 100,000 per ounce in both buy and sell prices.
Bao Tin Minh Chau Corporation quoted its 999.9 pure round gold coins with the Rong Thang Long stamp at VND 74.18 million per ounce and VND 75.78 million per ounce, a decrease of VND 10,000 per ounce in both prices compared to yesterday morning.
In the Ho Chi Minh City market, SJC Corporation listed gold bars at VND 82.5 million per ounce and VND 84.7 million per ounce. SJC plain gold rings traded at VND 73.5 million per ounce for buying and VND 75.2-75.3 million per ounce for selling, depending on weight.
Concluding its two-day policy meeting, the Fed maintained interest rates and acknowledged that progress in lowering inflation to the target of 2% had “fallen short.” However, during the subsequent press conference, Powell dismissed the possibility of further rate hikes, which had been a recent concern in the financial markets.
“I think it would be very hard to see the next move as a cut. Let me say it’s very unlikely,” Powell emphasized.
Gold prices had declined sharply on Tuesday as investors anticipated a hawkish signal from the Fed during the meeting, including the potential for additional rate increases. Powell’s remarks alleviated these concerns, paving the way for gold’s recovery on Wednesday and reclaiming the psychological level of $2,300 per ounce lost in the previous session.
Furthermore, the US dollar and US Treasury yields also declined during the session, providing additional support to gold prices.
The yield on the 10-year US Treasury note briefly dipped below 4.6% following Powell’s comments. The Dollar Index reversed its path after reaching a six-month high, fluctuating around 105.7 this morning, down from 106.4 yesterday morning.
Some analysts suggest that gold prices are still supported by geopolitical risks and the uncertain outlook for the global economy.
“There’s still a fair amount of uncertainty about the global economy, you’ve got geopolitical issues, you’ve got uncertainty around a number of elections around the world this year; all of those things favor gold,” said Chris Gaffney, President of World Markets at investment bank EverBank.
Gold prices reached a record high above $2,430 per ounce on April 12, driven by central bank buying, retail demand in China, and geopolitical tensions in the Middle East. However, since then, prices have dropped by over 5% as geopolitical tensions in the Middle East subsided and the Fed signaled a pause in rate cuts this year.
“Higher for longer rates could be a negative for gold, but investors can put that to the side at least for the time being and look at some of the other factors which are supportive of gold at this point,” said Gaffney.
The world’s largest gold ETF, SPDR Gold Trust, sold 1.2 tons of gold on Wednesday, reducing its holdings to just over 831 tons.
At around 10:00 AM, Vietcombank quoted the USD at VND 25.084 (buying) and VND 25.454 (selling).
