Gold investors can breathe a sigh of relief as the U.S. Federal Reserve indicated its commitment to reducing interest rates three times this year. This has sparked renewed buying momentum in the market.
On Thursday, March 21, the price of 24-karat gold experienced a modest increase in Saudi Arabia, reaching SAR3,029. Additionally, within the Kingdom, 10 grams of 24-karat gold are currently being sold for SAR2,600, and the price per ounce of gold stands at SAR8,086.
On Wednesday, the highly anticipated announcement from the Fed revealed that it would maintain the Fed interest rate within a range of 5.25 percent to 5.50 percent. However, the focus of the markets shifted towards the central bank’s forward guidance on interest rates for the rest of the year.
The gold market experienced a surge as market participants began solidifying their expectations of a rate cut in June. According to the CME FedWatch Tool, the probability of a rate cut in June is now over 60 percent, surpassing the 50/50 chance that was priced in prior to the announcement.
Read more: Gold prices in Saudi Arabia inch higher ahead of key Fed meeting
Fed cautious on timing of rate cuts, optimistic about economy
The central bank’s updated interest rate projection, known as the “dot plot,” shows that the committee expects the Fed Funds rate to remain unchanged at 4.6 percent by the end of the year, aligning with the forecast from December.
Prior to the announcement, the gold market was trading in a relatively neutral position but reacted positively, pushing prices into the upward territory. Currently, spot gold prices are at $2,1673.60 per ounce, reflecting a 0.77 percent increase for the day.
While the central bank continues to signal future rate cuts, it remains hesitant to provide specific timing. The monetary policy statement conveyed a highly optimistic outlook on the overall health of the economy.
Copper rally resumes, PMI in focus
The price of copper futures on the London Metal Exchange for the three-month period increased by 0.6 percent to reach $9,053.50 per ton. Additionally, one-month copper futures in the U.S. saw a 0.4 percent rise, reaching $4.1078 per pound. These prices were near the highest levels witnessed in the past eleven months earlier in the week.
The current focus is on a series of crucial purchasing managers index (PMI) readings scheduled to be released in the upcoming days. These readings, originating from major economies, are expected to provide further insights into the trajectory of copper demand.
The surge in copper prices this month can be attributed to the possibility of supply disruptions caused by production reductions implemented by China’s largest copper refiners.
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