Fed wind in gold: Gram price jumps 171 liras in one day

Dovish messages from US Federal Reserve (Fed) officials have strengthened expectations that an interest rate cut could be implemented in December. As this development triggered a sharp upward wave in the gold market, the price of gram gold has gained 171 liras in value from yesterday to today.

Investors have been locked on signals from the Fed since last week. The "dovish" statements from bank officials have reinforced forecasts that the Fed could narrow the interest rate corridor in the final month of the year. These developments in the market have pushed gold prices upward once again.

With the news flow originating from the US, spot gold has turned its direction upward. The precious metal, which tested the 4,156 dollar band during the night, reached its highest level seen since November 14. As of the opening hours of the morning session (08:14), the spot price stabilized at the 4,145 dollar level.

SHARP RISE IN GRAM GOLD

Both the appreciation in spot gold and the partial increase in the dollar/TL exchange rate created upward momentum in gram gold prices. Gram gold, which had retreated to the 5,500 lira level yesterday, began trading at 5,657 liras as of 08:16 this morning. Thus, gram gold has earned its investors 171 liras from yesterday to today.

GRAND BAZAAR GAP REMAINS WIDE

The price difference between the free market and the official exchange rate continues to draw attention. The gram gold selling price on the boards in the Grand Bazaar was recorded at 5,877 liras.

CURRENT GOLD PRICES

Gram Gold % 0.31

BUY(TL) 5,653.50

SELL(TL) 5,654.27

Quarter Gold % 0.20

BUY(TL) 9,488.00

SELL(TL) 9,563.00

Gold (ONS) % 0.21

BUY($) 4,140.84

SELL($) 4,141.40

CRITICAL MESSAGES FROM FED OFFICIALS

Fed Governor Christopher Waller pointed to the picture in the labor market in his assessment on Monday. Waller stated that the market is weak enough to justify a quarter-point interest rate cut in December. However, he emphasized that subsequent steps would depend on the data flow, which has been delayed due to the government shutdown.

Prior to these comments, New York Fed President John Williams' statements last Friday that "US interest rates could fall in the near term" had increased expectations in the market.

In light of these developments, markets are pricing in an 81 percent probability of an interest rate cut in December; this rate was only at the 40 percent level last week.

Now, eyes have turned to critical data such as US retail sales, unemployment benefit claims, and the producer price index, which were postponed due to the government shutdown and are expected to be announced this week.

News Source: 12punto