Gold prices are awaiting the Fed’s interest rate decision. The price is far from its all-time highs for now. For gold to rise again and probably exceed the all-time high price, interest rates would have to be cut by 50 basis points, says Carsten Fritsch, commodity analyst at Commerzbank.
Further interest rate cuts need to be signalled very clearly
“Gold prices have retreated somewhat from their all-time high of $2,590 per troy ounce reached earlier in the week, and are currently trading around $20 lower. The price rise to the aforementioned all-time high was largely driven by expectations that the US Federal Reserve would cut interest rates by 50 basis points at its meeting that began yesterday.”
“According to federal funds futures, the probability of this is around 60 percent. If the Fed, as we expect, cuts interest rates by ‘only’ 25 basis points, this will likely cause disappointment in the market and therefore weigh on the price of gold.”
“If these do not deviate too much from current market expectations, the downside potential for gold should be limited. For gold to rally and set new all-time highs after the Fed meeting, interest rates would have to be cut by 50 basis points today and further substantial interest rate cuts would have to be very clearly signaled.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
