The gold market is maintaining a steady recovery momentum as the US Federal Reserve (FED) continues to cut interest rates, a move that many have long predicted and expected.
The Federal Open Market Committee (FOMC) cut the federal funds rate by 25 basis points, in line with expectations. The rate is now trading in a range of 4.5% to 4.75%.
The Fed did not provide much guidance on the future path of monetary policy, noting that the economy continues to grow at a solid pace.
“The Committee seeks to achieve maximum employment and inflation near 2 percent over the longer run. The Committee judges that risks to its employment and inflation goals are roughly balanced. The Committee is mindful of risks to both sides of its dual mandate,” the Fed said in its monetary policy decision.
Not only the FED, the Bank of England (BoE) has also just decided to cut interest rates further. In a long-awaited move, the BoE cut the bank rate to 4.75% on Thursday.
The BoE said it could cut interest rates as inflation is expected to remain close to its 2% target.
“There has been continued progress in reducing deflation although remaining domestic inflationary pressures are being slowly resolved,” the central bank said in its monetary policy statement.
Looking ahead, Bo said they expect to continue cutting rates through 2025, albeit at a cautious pace.
The BoE's cautious tone in normalizing interest rates was somewhat tougher than expected, said Michael Brown, senior analyst at Pepperstone.
In addition, gold prices rebounded strongly after the US labor market data was released. Mr. Ernest Hoffman - market analyst of Kitco News - said that the number of Americans filing new unemployment benefits last week was in line with forecasts, while the number of applications for benefits continued to increase.
The U.S. Department of Labor reported on Thursday that initial jobless claims rose to 221,000 for the week ended Nov. 2. The figure was in line with expectations, as the consensus estimate was for 221,000.
According to Kitco senior analyst Jim Wyckoff, another reason for gold's recovery last night was a wave of buying as the metal fell sharply before the US presidential election results.
Along with the wave of "bottom-scraping", the decision of the FED and BoE to cut rates by 25 basis points, and US economic data have supported gold to move towards the threshold of 2,700 USD/ounce. Spot gold was last traded at 2,690.4 USD/ounce, up 1.18% on the day.
At 2:35 a.m. on November 8, 2024 (Vietnam time), the world gold price listed on Kitco was at 2,694.1 USD/ounce.
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