At the close of trading on 10/12, global spot gold prices rose by 20 USD to 4,227 USD an ounce. Prices accelerated towards the end of the session, reversing an earlier downward trend, following an announcement by the Federal Reserve (Fed) of a 25 basis point (0,25%) reduction in its benchmark interest rate for the third time this year.

On the morning of 11/12, prices continued to climb, at one point reaching 4,244 USD an ounce. Tai Wong, a precious metals trader, noted, "Investors liked today's outcome, so gold prices rebounded after profit-taking sell-offs." Lower interest rates enhance gold's appeal, as the precious metal does not offer fixed interest.

Global gold prices rose sharply following the Fed's interest rate cut. Chart: Kitco

Following the meeting, the Fed signaled a potential pause in further rate cuts in the near future, as officials require clearer indications regarding inflation and employment in the US. The agency anticipates reducing interest rates only once a year for the next two years, by 25 basis points.

Fed Chair Jerome Powell stated that their policy would better enable the US to respond to future developments. Wong added, "Major markets all rallied throughout Powell's press conference. However, it remains unclear whether gold can set a new peak." The precious metal last reached a record high in late October.

Beyond gold, silver prices also accelerated after the Fed's decision. The price per ounce on 10/12 reached a new record high of 61,85 USD. Since the start of the year, silver has risen 113%, primarily due to industrial demand, declining inventories, and the US designating it as an essential mineral.

Conversely, platinum and palladium prices decreased. Platinum fell 2,4% to 1,654 USD an ounce. Palladium dropped 2% to 1,475 USD.

Ha Thu (according to Reuters)