The US Federal Reserve has cut interest rates for the third consecutive time. Now they are between 3.5% to 3.75%. This is the lowest level in almost three years. The Fed has hinted at just one more rate cut next year, although the market disagrees. US rate cut is likely to have a global impact. This step of US is also affecting the prices of gold. Gold prices are skyrocketing due to this decision. Today in this news, we will tell you what effect the US Federal Reserve’s interest rate cut has had on gold prices and what is going to happen next. We will tell everything in detail.
Gold rose by more than ₹700 on MCX yesterday
First of all let’s talk about yesterday’s gold prices. Yesterday, on December 11, a significant increase was seen in the prices of gold and silver. This increase comes after the US Federal Reserve cut interest rates for the third consecutive time. Gold prices rose by nearly ₹700 on the Multi Commodity Exchange (MCX), while silver prices once again reached an all-time high. Gold for delivery on February 5 had closed at ₹ 1,29,796 per 10 grams in the last session and opened at ₹ 1,30,250 today. It also rose to ₹1,30,590 in early trade.
Silver once again reaches all-time high
At 10:30 am, gold was trading at ₹1,30,527, up ₹731 or 0.56 per cent. Meanwhile, silver prices again hit a new record today, rising by nearly ₹4,000. Silver for delivery on March 5 had closed at ₹1,88,735 per kg in the previous session and opened at ₹1,89,908 today. In early trade, it jumped to ₹1,93,452. At 10:30 am, it was trading at ₹1,92,711, up ₹3,976 or 2.11%.
Situation of gold and silver in the international market
Spot gold rose 0.7% to $4,236.57 an ounce in the international market. Meanwhile, US gold futures for February delivery fell 0.3% to $4,224.70. Silver also continued its spectacular rise, with spot prices reaching a record $61.85. This year silver has increased by 113%. This rise has come due to strong industrial demand, declining reserves and the US classifying it as an essential mineral.
Fed’s tough stance
Overall, the US Federal Open Market Committee (FOMC) has decided to cut the benchmark interest rates after a two-day meeting. With a cut of 0.25 basis points, this is the lowest level in the last three years. However, the Federal Reserve has taken a tough stance. Federal Reserve Chairman Jerome Powell has indicated that there will be no further cuts in interest rates in the future.
Inflation and labor market increase Fed’s concern
Rising inflation and recession in the labor market are being considered as the reason for this step of the Fed. The Federal Reserve takes such steps to control inflation, stabilize the economy, increase liquidity in the market and prevent the economy from growing. Market experts say that low interest rates will reduce the cost of borrowing, which will provide more investment opportunities to companies. This is also a good opportunity for emerging markets like India, which is likely to increase foreign investment. The effect of the US Federal Reserve’s third consecutive interest rate cut is clearly visible on the prices of gold and silver. Only time will tell whether this rise in gold and silver prices will continue or there will be a fall.