Gold Holds Gains as Traders Assess Powell Remarks on Rate Path
Gold held gains as traders assessed Federal Reserve Chair Jerome Powell’s remarks after the US central bank cut rates by a quarter percentage point to support the economy.
US policymakers voted unanimously to lower the federal funds rate to a range of 4.5% to 4.75%. The adjustment followed a larger, half-point cut in September. They tweaked language to note “labor market conditions have generally eased.” The statement released Thursday by the Federal Open Market Committee noted inflation has made progress toward its 2% objective “but remains somewhat elevated.”
Treasuries pared gains and the dollar pared losses after the statement, with bullion hovering around $2,695 an ounce.
The widely expected rate decision follows the re-election of Donald Trump, who has promised to deploy more aggressive tariffs and extend tax cuts. Those policies are seen by analysts as boosting economic growth, but also stoking inflation. Wall Street economists now see fewer Fed cuts than they did before the election. JPMorgan Chase & Co. still predicts a 25 basis-point easing this week and another next month, but sees the Fed slowing to a rate cut every other meeting after that.
Gold is likely to trade weakly in the near term as US equities rally on lower tax and regulation prospects, and as machine-based selling exaggerates the downside, Citigroup Inc. analysts led by Max Layton said in a note. However, structural drivers for the metal’s bull market remain in place, they added, pointing to a deteriorating US labor market as a result of high rates.
The precious metal has surged about 30% this year to repeated record highs, powered by heightened geopolitical and economic risks, driving purchases by central banks and consumers alike. The rally intensified in the last few months as the Fed pivoted to rate cuts and the US election loomed.
Spot gold was up 1.8% at $2,707.83 an ounce as of 3:18 p.m. in New York. The Bloomberg Dollar Spot Index was down 0.8%. Silver and platinum gained, while palladium edged lower.
Source: Bloomberg
