Gold defies high US yields, climbs despite Fed's aggressive stance
On Thursday, the Gold price trimmed some of its losses from Wednesday, posting a timid advance of 0.20%. Thursday’s minor gain follows the Federal Reserve’s (Fed) decision to adopt a more gradual stance, pushing against three interest rate cuts for 2025. The XAU/USD trades at $2,588 after reaching a daily high of $2,626.
The US economic docket on Thursday witnessed a drop in Americans asking for unemployment benefits. In the meantime, US GDP grew 3.1% YoY in Q3 in its final release, according to the US Bureau of Economic Analysis.
Despite this, the financial markets are focused on deciphering what will happen in 2025. Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC) board reduced borrowing costs by 25 basis points. It wasn’t unanimous, however, as Beth Hammack of the Cleveland Fed voted to maintain the “status quo.”
In addition, Fed officials have turned their attention to inflation, as expressed in the dot plot. They forecast two 25 bps rate cuts in 2025 and two more for 2026.
In the meantime, the US government is only days away from being shut down with US President-elect Donald Trump pressuring Republicans in the House of Representatives to increase or eliminate the debt ceiling.
Source: Fxstreet
