The price of gold reacted to the monetary policy decisions of the US Federal Reserve with significant price gains and continued to rise. In the late morning, a troy ounce (31.1 grams) was trading at 1980 US dollars on the London Stock Exchange. The precious metal has gained around 1.7 percent or around $30 in value since the US Federal Reserve’s decision was published the previous evening. The gold price thus continued to rise towards a record high, which was last reached in 2020 at $ 2075.
Despite the recent turbulence in the banking sector, the US Federal Reserve continued its fight against high inflation by raising interest rates again on Wednesday evening. At the same time, however, the US monetary authorities made it clear that further increases in interest rates are unlikely in the current year.
The prospect of an imminent end to US interest rate hikes had weighed on the US dollar, buoying gold prices. Because gold is traded in American currency on the world market, a weaker dollar makes the precious metal cheaper. This creates more demand and usually pushes the price up.
“If the impression is that the phase of interest rate hikes is coming to an end, gold will remain in demand,” commented precious metals dealer Alexander Zumpfe from Heraeus. According to his assessment, a gold price above 2000 dollars would then be possible again. The price of gold briefly rose above this mark this week as a result of the bank turmoil.
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