Gold prices plummeted before the FED's move

According to Kitco, US Federal Reserve Chairman Jerome Powell has just struck a rather positive tone when noting that “the economy is in a solid state”. He did not give much direction on monetary policy.

“Looking ahead, if the economy develops as expected, policy will shift to a more neutral direction. But we are not on any pre-determined path. The risks are two-fold and we will continue to make our decisions meeting by meeting.

“In considering additional policy adjustments, we will carefully assess incoming data, the evolving outlook, and the balance of risks,” Mr. Powell said.

These were the Fed Chairman's first comments since the US central bank cut interest rates by 50 basis points. Mr. Powell spoke at the annual meeting of the National Association for Business Economics (NABE) in Nashville, Tenn.

“Our decision to cut interest rates by 50 basis points reflects our confidence that, with appropriate adjustments to the stance of policy, labor market strength can be maintained, amid moderate economic growth and inflation falling sustainably to 2 percent,” he said.

The gold market fell sharply last night after Mr. Powell's comments. December gold futures were trading at $2,658.3/ounce, down 0.34% on the day. At the time of writing (2:30 a.m. on October 1, 2024 - Vietnam time), the world gold price listed on Kitco was at $2,629.5/ounce.

Despite the drop in gold prices, Neils Christensen - an analyst at Kitco News, said that gold still maintains its purchasing power, reaching an all-time high compared to major currencies such as the euro, pound, CANADIAN DOLLAR...

Gold prices have gained about 25% this year against a basket of global currencies, according to new research from Incrementum.

Many analysts still expect precious metals to have much potential to increase in price because the US Federal Reserve is leading central banks in the global interest rate easing cycle.