Following the US Federal Reserve’s recent interest rate decision, gold prices surged back above the $2000 level on Thursday morning. The yellow metal experienced a gain of 2.79%, reaching $2,053.00. Simultaneously, oil prices also witnessed an upward trend as investors responded to the central bank’s decision. At the time of reporting, US crude rose by 1.05% to approximately $70 per barrel, while Brent exhibited a 1.23% increase, trading at $75 a barrel.
Analysts Evaluate Gold’s Resurgence Post-Fed Announcement
Craig Erlam, a senior market analyst at OANDA, commented on the gold surge, stating that it surpassed the $2,000 mark after the Fed announcement. He suggested that with a weaker dollar and sustained lower yields, gold could continue to gain momentum. Erlam hinted at the possibility of a “Santa rally” for gold, indicating a positive sentiment among traders.
Market Reaction in Asia Post-Fed Rate Decision
In Asian markets, shares predominantly rose on Thursday in response to the Federal Reserve’s indication of potential interest rate cuts in the coming year. Tokyo’s Nikkei 225, however, experienced a 0.7% decline, influenced by a strengthening yen against the US dollar. Hong Kong’s Hang Seng index, on the other hand, climbed 1.1%, while the Shanghai Composite slipped 0.3% following a World Bank report projecting a slowdown in China’s economic growth.
Wall Street’s Positive Rally Following Fed’s Lower Rate Expectations
Wall Street witnessed a robust rally as the Dow Jones Industrial Average surged to a record high of 37,090.24 points, jumping 512 points or 1.4%. The S&P 500 and the Nasdaq composite also rose by 1.4%, with the S&P 500 approaching its record at 4,707.09. Lower interest rate expectations tend to relax economic pressures, contributing to the positive market momentum since October.
Federal Reserve Maintains Interest Rates Amidst Positive Economic Indicators
The Federal Reserve, in its latest meeting, decided to keep its main interest rate steady in the range of 5.25% to 5.50%. This decision, widely expected by the market, reflects the central bank’s management of inflation, which has decreased from its peak of 9% while maintaining a solid economic performance. The Fed’s indication of potential rate cuts in 2024 has further fueled optimism in various asset classes, including gold and oil.
SOURCE: Ref Image from CNBC
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