Gold prices jump 3% in a week…U.S. rate-cut hopes

Korea Economic Daily

Summary

It reported that recently gold prices rose about 3% in a week.
It said that U.S. rate-cut expectations are being reflected in investor sentiment toward gold.
Bloomberg reported that this year's gold price increase rate is the highest since 1979.

Gold prices rose again this week. The increase reflects hopes for a U.S. interest rate cut.

On the 28th (local time), according to Bloomberg News, as of 2:20 p.m. that day the spot gold price was up 0.6% at 4186 dollars per ounce. It has risen about 3% this week. It is interpreted that expectations that the U.S. central bank (Fed) will lower the benchmark interest rate are pushing up gold prices.

According to the Chicago Mercantile Exchange (CME) FedWatch tool, at the same time in the federal funds futures market the probability that the Federal Open Market Committee (FOMC) meeting to be held on the 9th–10th of next month will cut the benchmark rate by 0.25% point was reflected as 85%. That is 46% points higher than a week ago.

Bloomberg reports that this year’s gold price has risen almost every month and is expected to record the highest rate of increase since 1979. The current gold price has surged 60% compared with the end of last year (2624 dollars per ounce).

However, after gold prices surged to a record high of 4380 dollars on the 20th of last month, they slipped back to the 4000-dollar level and traded sideways for a while as the Fed’s chances of cutting rates receded. Since then, this week they have shown a renewed upward trend on renewed prospects of a rate cut.

Song-ryeol Lee, Hankyung.com reporter yisr0203@hankyung.com

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