Gold Holds Drop as Powell Tempers Fed Rate-Cut Expectations
Gold edged higher following a sharp decline when traders wound back bets on an interest-rate cut in September, after Federal Reserve Chair Jerome Powell said the central bank’s policy settings remain well-positioned.
Bullion traded near $3,285 an ounce, following a 1.6% loss on Wednesday — its steepest one-day decline in a month. After the Federal Open Market Committee voted to keep rates steady for a fifth consecutive time on Wednesday, Powell cited labor market resilience, above-target inflation and lingering unknowns surrounding President Donald Trump’s tariff agenda as reasons for standing pat. The dollar surged and Treasury yields jumped, creating headwinds for gold as it’s priced in the currency and doesn’t pay interest.
“There are many, many uncertainties left to resolve,” Powell said at a post-meeting press conference, noting that policymakers would be considering incoming data ahead of their next rate decision in September. “It doesn’t feel like we are very close to the end of that process.”
Traders have pared back the probability of a September rate cut to about 43%, from around 60% prior to Powell’s remarks. Higher borrowing costs also typically weigh on non-yielding bullion.
Trump’s tariff agenda and concerns about a global trade war have been a major catalyst for gold’s surge by about a quarter this year —including an all-time high above $3,500 an ounce in April — while geopolitical conflicts have also sparked haven demand.
Spot gold was up 0.3% to $3,284.98 an ounce at 8:06 a.m. in Singapore. The Bloomberg Dollar Spot Index was down 0.1%. Silver was little changed, while platinum dipped and palladium rose.
Late on Wednesday, the president said he had reached a deal with South Korea that would impose a 15% tariff on its exports to the US. Other agreements may come before Trump’s deal-making deadline on Friday. Along with trade talks, investors are also shifting focus to Friday’s July US employment figures, which are expected to show job growth moderated and unemployment rose.
Source: Bloomberg
