The Gold price remained virtually unaffected by the US Federal Reserve’s monetary policy decision on Wednesday evening, Commerzbank’s Head of FX and Commodity Research Thu Lan Nguyen notes.
Prospect of lower US interest rates remains supportive for Gold
“The decision to leave interest rates unchanged came as little surprise. The fact that the FOMC members’ interest rate projections also remained unchanged was probably more decisive. The majority continue to expect two interest rate cuts over the course of the year.”
“This is roughly in line with current market expectations (based on Fed Funds Futures) and was therefore also nothing new. It is true that seven of the 19 members now expect no interest rate cuts at all this year, compared to four previously.”
“But even this hawkish shift came as little surprise to most market participants, as they themselves have significantly lowered their interest rate expectations since May. In principle, however, the prospect of lower US interest rates remains a supportive factor for Gold, even if it is unlikely to lead to another sharp rise in prices.”
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