Gold falls after Fed expects slower pace of future rate cuts
Gold prices fell on Wednesday after the U.S. Federal Reserve held interest rates steady and signaled a slower pace of cuts in the future, and chair Jerome Powell said the central bank is expecting a "meaningful amount of inflation" in coming months.
Spot gold was down 0.4% at $3,374.75 an ounce by 3:19 p.m. EDT (1919 GMT). U.S. gold futures settled 0.03% higher at $3,408.1.
Spot prices had briefly risen after the Fed held interest rates at its current 4.25%-4.50% range and pointed at a half percentage point reduction by year end.
However, "Chair Powell sapped the initial optimism by repeating multiple times that given low and stable unemployment, the Fed is in a good spot to wait and see. He hinted broadly that September could be a live meeting but it wasn't enough for asset markets or gold which were hoping for a more dovish tilt," said Tai Wong, an independent metals trader.
"Gold needs to reclaim 3,400 for bulls to take firm control."
While policymakers still anticipate cutting rates by half a percentage point this year, they slightly slowed the expected pace from there to a quarter percentage point cut each in 2026 and 2027.
Powell also said the forecasts could change based on incoming data, especially on inflation.
Meanwhile, Trump said on Wednesday that he may meet with Iran to talk about the Isran-Israel conflict.
Geopolitical tensions and low interest rates lift gold's appeal.
"The prevailing trend of seeking alternative stores of value beyond the U.S. dollar remains strong, driven by a growing desire for assets that are independent of external control," said Ryan McIntyre, Managing Partner at Sprott Inc.
Spot silver fell 1.5% to $36.70 per ounce, while platinum gained 4.3% to $1,319.03, after rising 5% earlier to its highest since February 2021.
Palladium fell 0.5% to $1,046.75.
Source: Reuters
