Fed Signals Rates May Hold, Sending Gold Up $225 an Ounce in 24 Hours

Gold prices jumped as much as $225 an ounce within 24 hours after a Federal Reserve official left open the possibility of keeping interest rates unchanged in September. Global gold reached $4,507 an ounce at 10:30 p.m. Vietnam time on Sept. 3, up nearly $120 from earlier in the day.

Fed Governor Christopher Waller said recent data had finally shown signs that inflation was easing. If the August consumer price index confirms that trend, he said he would lean toward holding rates steady. A hotter-than-expected figure, however, could still put a rate increase on the table.

The message pushed down U.S. bond yields and improved sentiment in stock markets. Expectations for a Fed rate hike dropped from 70% to 50%, while gold rose from $4,439 an ounce in the afternoon to its evening peak. The increase from the previous night's low equaled about 7.07 million dong per tael.

Converted at listed bank exchange rates, global gold stood at about 142.7 million dong per tael. SJC gold bars sold for 148.4 million dong per tael in Vietnam and bought for 145.4 million dong, both down 300,000 dong from the start of the day. 9999 gold rings sold for 147.9 million dong. Domestic branded gold remained 5.7 million dong above the converted global price.

Analyst Tran Duy Phuong said gold could move toward $4,888 an ounce if the Fed holds rates steady. The next focus is the U.S. August CPI report, scheduled for Sept. 11. A cooler reading could strengthen expectations of unchanged rates, while a hotter result could revive rate concerns and cause gold prices to reverse. Silver also rose to $66.8 an ounce.

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If the August CPI continues to show cooling inflation, I lean toward holding rates steady. But if the data come in hotter than expected, a rate increase will still be considered.