On the early morning of September 19th, the Federal Reserve announced that the target range for the federal funds rate was reduced by 50 basis points from 5.25%-5.50% to 4.75%-5.00%.

This marked the first interest rate cut by the Federal Reserve in four years.

Following the release of the Federal Reserve's interest rate decision, the international gold price surged to a record high of $2,600.16 per ounce; it then sharply reversed its gains and turned down, hitting a daily low of $2,546.98 per ounce.

During the Asian trading session, the international gold price once again rose, approaching the previous high.

On the early morning of September 19th, the Shanghai Gold Exchange's gold T+D surged to a high of 586.13 yuan per gram, and the morning gold T+D opened lower, with the lowest price reaching 578.66 yuan per gram.

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In addition, domestic gold jewelry prices have also been slightly adjusted downwards.

On September 18th, the gold listing prices of Chow Tai Fook, Lao Feng Xiang, Zhou Liu Fu, Chow Sang Sang, Lao Miao Gold, and Zhou Da Sheng were all 758.00 yuan per gram, while the gold listing prices of Cai Bai Gold and China Gold were 739.00 yuan per gram and 582.70 yuan per gram, respectively.

On September 19th, the gold listing prices of Chow Tai Fook and Zhou Liu Fu were both 753.00 yuan per gram, the gold listing prices of Lao Miao Gold and Lao Feng Xiang were both 752.00 yuan per gram, the gold listing price of Chow Sang Sang was 754.00 yuan per gram, and the gold listing price of China Gold was 581.70 yuan per gram.

Wang Jun, Deputy General Manager of Greenland Dahua Futures, told reporters from Times Weekly that although the international gold price has risen and fallen, the overall trend is still upward.

The main reason for the short-term correction of gold is the effect of the "landing" of the policy.

In fact, the rise in gold prices may not necessarily be good news for gold jewelry sales companies.

A consumer industry analyst who once worked for a securities firm in East China told reporters from Times Weekly that a rise in gold prices represents an increase in the cost of raw materials for gold jewelry, and if the retail prices rise too quickly, it may suppress the enthusiasm of potential buyers.

If the retail prices do not rise in time, it may erode the company's profits.

After the Federal Reserve's interest rate meeting, Federal Reserve Chairman Powell said that inflation has significantly eased but is still higher than the Federal Reserve's target.

The 50 basis point rate cut this time is the right choice, and decisions will be made at each meeting.

The rate cut can be fast or slow, or even paused, and do not regard the 50 basis point cut as the norm.

The Federal Reserve will not consider stopping the reduction of its balance sheet.

Guoshou Security Fund believes that the Federal Reserve's rate cut in September was a foregone conclusion, but the magnitude of the rate cut was slightly higher than expected.

Before this rate cut, market expectations were complex, with expectations of a 25BP and 50BP rate cut both present.

The rate cut cycle in 2019 started with a 25BP cut, while in 2001 it started with a 50BP cut.

The market previously understood that the first 50BP rate cut might reflect a deterioration in economic expectations.

As of 6:00 on September 19th, the FedWatch tool of the Chicago Mercantile Exchange showed that the probability of the Federal Reserve continuing to cut interest rates at the November meeting reached 100%.

Among them, the probability of a 25 basis point rate cut reached 62.20%, and the probability of a 50 basis point rate cut reached 37.80%.

Times Weekly reporters noticed that before Powell's speech, the international gold price once rose to a historical high of $2,600 per ounce, and then fell back down to touch $2,550 per ounce, falling $50 per ounce from the daily high, completely giving up the gains since the announcement of the Federal Reserve's interest rate decision.

Xia Yuchen, founder and general manager of Xinhongrui Investment Management Company, told reporters from Times Weekly that the market adjusted the consensus on expectations for the future economic situation after the rate cut, and the speech at the press conference conveyed a signal that was not dovish, judging that the speed of the rate cut process was not as expected, thereby driving the US dollar to strengthen and suppressing the gold price.

In addition, after the initial rise, some investors may choose to sell gold to obtain short-term profits, causing the price to fall back.

"Due to the Mid-Autumn Festival holiday, the precious metal prices have already priced in the expectation of a 50BP rate cut, and gold has continued to set historical highs, with crowded long positions.

After the interest rate meeting, gold rose sharply and then fell rapidly.

After the rate cut landed, it means that the short-term good news has been exhausted, and the market buys expectations and sells facts."

Liang Haikuan, a senior non-ferrous and precious metal analyst at Founders Midterm Research Institute, believes that Powell's statement reminds the market not to regard a large rate cut as a regular rhythm in the future, and the subsequent decisions will be entirely based on data, and believes that the future neutral interest rate will be higher than before, limiting the expectations of future gold price increases.

This rate cut can be understood as a preemptive release of good news, and the benefits of the Federal Reserve's monetary policy will be relatively limited in the future.

Fan Rui, a non-ferrous analyst at Guoyuan Futures, analyzed for reporters from Times Weekly that before this interest rate meeting, the market's expectations for a 50BP rate cut in September exceeded the expectations for a 25BP rate cut, and there was no excessive good news beyond expectations.

The US dollar has recently fluctuated at a low level and closed positive, so gold briefly responded to this rate cut and then focused on the possibility of a weaker rate cut in the future.

There is still room for gold prices to rise.

The latest "dot plot" released by the Federal Reserve shows that the Federal Reserve's benchmark federal funds rate will reach 4.4% in 2024, equivalent to a target range of 4.25% to 4.5%.

This means that the Federal Reserve will cut interest rates by a total of 100 basis points this year, with a 50 basis point cut in September, and there is still an expectation of a 50 basis point cut.

Xia Yuchen explained that the dot plot is not a forecast, but only reflects the expectations of Federal Reserve officials under current information conditions.

"As the Federal Reserve starts the rate cut cycle, the US and Western European developed countries will enter a rate cut cycle in the future, which will form a medium and long-term benefit for the prices of gold and other precious metals.

It is expected that the gold market will continue to maintain a bull market pattern in the fourth quarter, and after high-level shocks and consolidation, it will reach new highs."

Wang Jun suggested that after the prices of precious metals continue to set new highs, investors should use gold and silver options and futures tools to manage risks comprehensively and make reasonable investments through portfolio strategies.

Fan Rui also has an optimistic attitude towards the future performance of gold.

He believes that the US election in the second half of the year will increase market volatility and risk aversion sentiment in stages, and gold will be priced more for its risk aversion attributes.

Although Europe and the US have entered a rate cut cycle, the possibility of inflation issues recurring cannot be ignored, and gold, due to its own physical value, will continue to play an anti-inflation role.

In addition, factors such as geopolitical issues, the global trade environment, and the decline in US dollar credit will continue to promote the continued rebound of gold demand.

"This round of rate cuts by the Federal Reserve can still be defined as a preemptive rate cut, and it is expected that the pace of rate cuts will be slow and the total reduction will be limited.

However, the cumulative increase in gold since the beginning of the year has been large, and the market's consensus expectations have been strengthened, with crowded long positions.

Once the US economy shows more resilience, the risk of a pullback will be greater."

Liang Haikuan said that in the medium term, the main driving force behind this round of gold price increases, that is, the willingness of central banks to buy gold, has begun to weaken, and the People's Bank of China has recently stopped increasing its gold holdings.

Central bank data shows that as of the end of August 2024, the central bank's gold reserves were 72.8 million ounces, unchanged from the previous month.

In May this year, the central bank ended its "eighteen consecutive increases" in gold reserves, and since then, the scale of gold reserves has always been maintained at 72.8 million ounces.

Liang Haikuan added that after the continuous rise in gold prices, the cost-effectiveness of allocating more in the interest rate cut cycle compared to US Treasuries is gradually weakening.

The continuous innovation of US stocks will also weaken the attractiveness of gold as an interest-free asset.

After this round of rate hikes, gold prices may face an adjustment, and the attractiveness as a major asset allocation in the medium and long term will gradually weaken, and it is not advisable to continue to chase high.