KUALA LUMPUR, Sept 20 (Bernama) -- Bursa Malaysia ended higher on Friday in line with most Asian markets, mirroring gains from Wall Street, where investors welcomed the US Federal Reserve's substantial interest rate cut. The FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 3.17 points, or 0.19 per cent, to 1,668.82 at the close from Thursday's close of 1,665.65. It opened 5.03 points higher at 1,670.68, trading between 1,668.48 and 1,674.04 throughout the session. In the broader market, gainers outpaced decliners 732 to 468, while 465 counters were unchanged, 850 untraded and 32 suspended. Turnover swelled to 4.19 billion units worth RM5.97 billion, from Thursday's 3.99 billion units worth RM4.08 billion. UOB Kay Hian Wealth Advisors head of investment research, Mohd Sedek Jantan, noted the FBM KLCI's gains were led by utilities, logistics, and banking stocks, reflecting improved market sentiment. Additiona
Gold prices could face a slight, near-term decline if the Federal Reserve decides on a modest 25-basis-point rate cut this week, according to Goldman Sachs Group Inc. However, the investment bank foresees a subsequent rally, driving the metal to a record high as increased investments flow into bullion-backed exchange-traded funds (ETFs).
“Fed rate cuts are poised to bring Western capital back into gold ETFs, a component largely absent in the sharp gold rally observed over the past two years,” said analysts Lina Thomas and Daan Struyven. They reiterated Goldman’s forecast for gold to surge to US$2,700 (RM11,542) an ounce by early next year.
Gold has been a top-performing commodity this year, climbing by about 25% and setting new records amid increased central bank purchases and expectations of the Fed's shift towards monetary easing. Investors remain divided on whether the US central bank will initiate its easing cycle this week with a half-point reduction or a more cautious 25-basis-point cut, as expected by Goldman Sachs.
“While we see some tactical downside to gold prices under our economists’ base case of a 25-basis-point Fed cut on Wednesday, we expect a gradual boost to ETF holdings — and thus gold prices — from the Fed’s easing cycle,” the analysts added. They noted that because ETF holdings increase gradually as the Fed cuts rates, the upside potential for gold is not yet fully reflected in current prices.
Global holdings in bullion-backed ETFs have rebounded in recent months after hitting their lowest level since 2019 in mid-May. However, they remain lower year-to-date and about 25% below their pandemic peak in 2020. As ETFs are backed by physical gold, inflows effectively reduce the available supply of the metal in the market.
Currently, spot gold is trading near US$2,585 an ounce. Meanwhile, silver — which often tracks gold's movements — has risen towards US$31 an ounce, marking its seventh consecutive day of gains and its longest winning streak since 2019.
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