Jakarta, CNBC Indonesia – The Central Bank of the United States or The Fed early Thursday morning in Indonesia decided to hold interest rates at the level of 5.25-5.50%. This decision is the fourth time since the last increase in interest rates in July 2023 by 25 basis points (bps).
However, the Fed is expected to signal cutting its benchmark interest rate three times this year. The Central Bank, commanded by Jerome Powell, is projected to start lowering its benchmark interest in semester II-2024.
Bank Indonesia also estimates that the Fed will reduce interest rates three times in the second half of this year, by a total of around 75 basis points. In contrast to previous years, the Fed's signal of lowering interest rates was more predictable.
This signal of a decrease in interest rates makes the potential bright for the instrument safe haven, gold, which is increasingly attractive in the eyes of investors. Even though at the beginning of this year the Fed was still holding interest rates, the price of gold is believed to continue to rise slowly but surely.
The World Gold Council (WGC), which is a collection of industry representatives working in the gold commodity, also projects that the price of this instrument will follow the record that occurred in 2024.
DFCX Futures analyst Lukman Leong considers the signal to cut interest rates to be set back for gold prices to start a new rally.
“I see that gold, even now, will still rise, albeit slowly. Investors predict that the Fed will cut interest rates in May, so I see that gold prices will start to rise no later than April,” he told CNBC Indonesia recently.
He assessed that gold remains prospective as an investment instrument and as an asset safe haven for investors in the midst of this uncertainty.
On a separate occasion, CNBC Indonesia Financial Expert Aulia Akbar also said that investors generally turn to gold when there is a crisis and uncertainty. The reason is, gold is usually a safe instrument and a safe haven asset with prices that consistently rise.
“The outlook for gold in the future, I think the correlation between gold and the Fed's interest rates is that if interest rates rise, the dollar strengthens, then demand for gold could fall. But if interest rates are low, treasury yield goes down, gold actually looks attractive,” said Akbar.
Furthermore, Akbar encouraged investors who are interested in diversifying into gold instruments, to make this investment a long-term commitment. Apart from that, investors are advised to buy gold according to their financial capacity.
“(You can make) gradual purchases. You can, for example, 1 gram per month or you can also wait for the price to drop a bit and buy a lot. The gold investment horizon is (planned) at 10 years,” he concluded.
Apart from being sensitive to movements in US interest rates, gold prices are also strengthening due to the increasingly widespread Middle East tensions following the bombing in Iran. This triggers the purchase of assets safe havenlike gold.
For your information, two bomb explosions occurred in Iran on Wednesday (3/1/2024) which killed at least 84 people in the south of the country. The incident also devastated a crowd celebrating Revolutionary Guard general Qassem Soleimani four years after his death in a US strike.
The two blasts were described as “terrorist attacks” by state media and regional authorities and came amid high tensions in the Middle East over the Israel-Hamas war in Gaza and the killing of a senior Hamas leader in Lebanon on Tuesday.
[Gambas:Video CNBC]
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