Gold Prices Surge After Fed Rate Hike; European Banks Move Gold Out of US
The price of gold surged on September 18th after the Federal Reserve raised interest rates by 0.25 percentage points to 3.75-4%. The move was widely expected, with markets betting on a rate hike for weeks amid persistent inflation and geopolitical tensions.
Global gold prices have recovered from a sharp drop following the Fed's decision, rising to $4,368.60 per ounce, a 2.44% increase over the previous session. The US Federal Reserve emphasized that inflation remains high and needs to be brought down to the 2% target.
However, experts warn that gold prices may remain volatile in the short term due to ongoing interest rate hikes. Strategist Kenny Ng Lai-yin at Everbright Securities International believes another interest rate hike could occur before the end of the year, causing gold to fluctuate.
In the long term, Ng Lai-yin predicts that the Fed will eventually bring interest rates back down, which could help gold prices reach $5,000 per ounce in 2027. Meanwhile, experts at UBS Bank advise investors not to focus too much on a single interest rate decision, suggesting that central banks' gold purchases and a recovery in demand in China and India could support prices.