Fed signals not yet stopping interest rate hikes
World gold and silver prices fell in the trading session on September 16 (US time) as the market reacted to the US Federal Reserve (Fed)'s decision to raise interest rates along with signals that the currency tightening cycle may not be over yet.
In the last trading session of the day in the US, spot gold prices at one point retreated to 4,261.80 USD/ounce, down 0.72%, while silver fell 1.16% to 62.82 USD/ounce.
However, the precious metal gradually recovered. At the time of writing (8:10 AM on September 17 - Vietnam time), spot gold prices on the international market were at 4,298.7 USD/ounce. World silver prices reached 63.66 USD/ounce, while platinum traded at 1,771 USD/ounce and palladium at 1,275 USD/ounce.
Selling pressure increased after the Fed decided to raise the base interest rate by 0.25 percentage points, bringing the federal fund interest rate range to 3.75-4.00%. This is the agency's first interest rate hike since 2023 to curb prolonged inflation.
The Fed's Summary of Economic Forecasts (SEP) shows that many officials still believe that monetary policy may need to continue to tighten. Most policymakers predict that there will be at least one more interest rate hike before the end of 2026.
Fed Chairman Kevin Warsh said that inflation is still high and the US economy has enough capacity to absorb tighter monetary conditions. This statement made the market assess that the decision to raise interest rates is not just a temporary reaction to energy price fluctuations.
US Treasury bond yields rose after the meeting. 2-year term yields rose to about 4.734%, 10-year term yields returned to 5%. The USD also strengthened, putting more pressure on non-performing assets such as gold.
Gold is affected by the USD and yields
The Fed's maintenance of a tough stance has reversed the recovery momentum of the precious metal before the meeting. Currently, gold prices are under pressure around the support zone of 4,257 USD/ounce, while the near resistance zone is at 4,313 USD/ounce.
In the short term, if gold prices exceed the 4.313 USD/ounce zone, the market may head towards higher levels around 4.382 USD/ounce and 4.510 USD/ounce. Conversely, if losing the support zone of 4.257 USD/ounce, the price may continue to test lower zones.
For silver, the price has fallen below the balanced zone of 63.317 USD/ounce and is testing the support zone around 62.156 USD/ounce. If recovering, the notable resistance zone is 64.301 USD/ounce.
This development shows that in the context of the Fed continuing to tighten policy, the strength of the USD and bond yields are having a greater impact than safe-haven demand for precious metals.
Oil prices cool down but inflation risks remain
In addition to the interest rate factor, the gold market is also closely monitoring developments in the Middle East, especially oil transportation through the Strait of Hormuz.
Oil prices fell in the session 16. 9. Brent oil fell 2.7%, to 105.83 USD/barrel, while WTI oil fell 3.2%, to 102.43 USD/barrel.
However, the fact that oil prices still remain above $100/barrel along with restrictions on shipping in the Gulf region still makes the Fed pay attention to the risk of widespread energy inflation.
For gold, the market is currently facing two opposite impacts. Falling oil prices help reduce inflationary pressure in the short term, but the Fed's tough monetary policy puts pressure on the precious metal.
Investors are currently continuing to monitor upcoming US economic data, including the number of unemployment claims, the Philadelphia Fed's manufacturing index and housing start-up data, to assess the ability of the US economy to continue to withstand a high interest rate environment.
The article only updates the developments of the gold market and factors affecting the price of precious metals, not investment recommendations.
