The chairman of the Federal Reserve, Wachst, did not explicitly signal a continuation of rate hikes, leading to a decline in market expectations for Fed rate hikes this month. As a result, international gold prices rose.
According to Bloomberg's report on October 19, gold prices opened higher this week, with spot gold trading around $4,180 per ounce. Last week, gold prices fell by 0.7%.
The change in market sentiment stems from a speech delivered by Federal Reserve Chairman Kevin Warsh in Bangkok, Thailand.
Woosh said on the 16th during the annual meetings of the International Monetary Fund and the World Bank that since the Fed raised interest rates in September, the performance of the U.S. economy has generally met expectations. However, he did not give a clear answer regarding whether the Fed will continue to raise interest rates this month.
"I will not make any preemptive judgments on the outcome of the meeting." Wosh claimed that he was against prematurely revealing decisions about the future monetary policy meetings.
This statement alleviated market concerns about the Federal Reserve’s consecutive interest rate hikes. According to Bloomberg, traders subsequently lowered their forecast for the Fed to raise interest rates by 25 basis points in October from about one-third to around 15%.
The Federal Reserve raised interest rates by 25 basis points in September this year, raising the target range for the federal funds rate to 3.75% to 4%. This is the first rate hike since 2023.
However, inflation pressures in the United States still exist. Recent data shows that the U.S. consumer price index increased by 3.7% in September. Some Federal Reserve officials have previously stated that if inflation continues to rise, further tightening of monetary policy may be necessary.
The next monetary policy meeting of the Federal Reserve is scheduled to take place on October 27th and 28th. Since gold itself does not generate interest, an increase in interest rates generally increases the opportunity cost of holding gold. Therefore, the prospects of Federal Reserve policy have always been a key factor affecting the price of gold.
