Gold futures exhibited strength in the face of uncertainty on Wednesday, September 20, closing at $1,967.10 per ounce, marking the fifth consecutive day of positive gains. This upward trend, observed just before the Federal Reserve (Fed) announced its monetary policy decision, was the longest positive streak since January of the current year.
Amidst the anticipation surrounding the Fed meeting, gold futures soared by $13.40, equivalent to a 0.69% increase. It is noteworthy that the New York gold market ceased trading before the official announcement by the Fed board regarding their decision.
While gold took the spotlight, other precious metals also displayed noteworthy movements:
- Silver futures surged by 38 cents or 1.62%, settling at $23.836 per ounce.
- Platinum futures experienced a decline of $6.10, translating to a 0.64% decrease, with a closing value of $942.30 per ounce.
- Palladium futures recorded a gain of $14.80, a 1.2% rise, and closed at $1,281.30 per ounce.
The surge in gold prices coincided with the Fed’s decision to maintain short-term interest rates at the range of 5.25-5.50%, marking the highest level in 22 years. This decision was in line with market expectations. However, the release of the policy interest rate forecast report, known as the Dot Plot, revealed that Fed officials were signaling a potential increase in interest rates by an additional 0.25%, aiming for a range of 5.50%-5.75% by the end of the year.
Investors are closely monitoring the Bank of England (BoE) meeting, scheduled for today. There is a 55% expectation among investors that the BoE will opt to maintain interest rates at the current level of 5.25%. This sentiment has seen a significant shift from the initial weight of only 20%, which was based on data following the release of the Consumer Price Index (CPI). The CPI, measuring inflation from consumer spending, unexpectedly decelerated to 6.7% in August, contrary to analysts’ prior expectations that it would rebound to 7.0% from its previous level of 6.8% in July.
In conclusion, the gold market exhibited resilience and bullish sentiment leading up to the Fed meeting decision, marking its longest streak of positive closings in 2023. The future trajectory of gold prices will continue to be influenced by global economic factors and central bank decisions, making it a key asset to watch for investors.
The Spot Market is Open
Thursday, September 21, 2023