The world gold price is predicted to reach US$2,700 per troy ounce after the United States (US) Central Bank The Federal Reserve (The Fed) cut interest rates. The gold price shot up to 1% closer to its all-time record high from 20^th September 2024.

Based on Refinitiv data on 19^th September, it was recorded at US$2,586.48 per troy ounce or up 1.08% compared to the previous position. Meanwhile, at the start of trading today, the gold price on the spot market was seen to have strengthened slightly by 0.03% to US$2,587.13 per troy ounce.

According to CNBC Indonesia, Goldman Sachs said it sees potential for a tactical pullback in gold prices. It might happen if the Fed cuts by only 25 basis points, but reiterated its long-term gold trade recommendation and target of $2,700 an ounce by early 2025.

The Fed surprised by cutting its benchmark interest rate by 50 basis points (bps) to 4.75-5.0% on Wednesday US time. The 50 bps cut was larger than market expectations of only 25 bps. This cut is the first since March 2020 or four years ago at the start of the Covid-19 pandemic.

As is known, the Fed raised interest rates by 525 bps from March 2022 to July 2023. They then held interest rates at 5.25-5.50% in September 2023-August 2024 or more.

The Fed believes that US inflation has moved towards its target range of 2%, so it cut interest rates. However, the main factor behind the 50 bps cut was the soaring US unemployment rate.

“Given the progress in inflation and the balance of risks, the Committee decided to lower the federal funds rate by 50 bps,” the Fed wrote on its official website.

FOMC members see the Fed’s benchmark interest rate at 4.4% by the end of this year, equivalent to 4.25%-4.5%. The Fed will hold another FOMC meeting on November 7 and December 18, 2024.

https://www.cnbcindonesia.com/research/20240920054213-128-573176/ramalan-terbaru-harga-emas-dunia-usai-the-fed-pangkas-suku-bunga