International gold prices 'relieved' by Fed's rate freeze... 1% up after rate decision

International gold prices 'relieved' by Fed's rate freeze... 1% up after rate decision

International gold prices rose as the US Federal Reserve (Fed) froze its benchmark interest rate on the 29th (local time).

According to Reuters, immediately after the Fed announced its rate freeze, at around 2:16 PM ET, spot gold prices were trading at $4,076.41 per ounce, up 1.2% from the previous close.

Before the Fed's rate decision, spot gold prices had temporarily fallen below the $4,000 per ounce mark during the day, driven by surging international oil prices and expectations of prolonged high interest rates.

On this day, ahead of the Federal Open Market Committee (FOMC) rate decision, some cautious selling emerged due to speculation that the Fed might make a 'surprise hike'.

Indeed, according to CME FedWatch, the interest rate futures market had reflected an approximately one-third probability of the Fed raising rates at this meeting, right up until the rate decision.

This was influenced by the market's assessment that there was significant uncertainty about what interest rate decision the Fed would make until just before the rate decision meeting, as new Fed Chairman Kevin Warsh minimized proactive guidance on future policy directions.

Metal trader Tai Wong told Reuters that it should be noted that the three dissenting members of the FOMC were regional Federal Reserve Bank (FRB) presidents, not Fed governors, adding, "Gold, which briefly dipped below the $4,000 per ounce level, now appears to be out of immediate danger."