Gold Recovers After Sharp Decline on More Cautious Rate Outlook
Gold climbed following a sharp decline in the previous session, as traders wound back bets on an interest-rate cut in September after US Federal Reserve Chair Jerome Powell said the central bank’s policy settings remain well-positioned.
Bullion rose 0.6% to trade near $3,295 an ounce, following a 1.6% loss in the previous session — its steepest one-day decline in a month.
The dollar gave up some of its gains made on Wednesday after the Fed’s decision to keep rates steady, with Powell citing labor market resilience, above-target inflation and lingering unknowns surrounding President Donald Trump’s tariff agenda. A stronger greenback makes gold more expensive for most buyers.
“There are many, many uncertainties left to resolve,” Powell said at a post-meeting press conference. “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 less than 50%, while odds for a reduction in October dropped to around 85% from being fully priced in before Powell’s remarks. Higher borrowing costs also typically weigh on gold, which doesn’t yield interest.
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.
The president on Wednesday said he had reached an agreement with South Korea that would impose a 15% tariff on its exports to the US. Earlier, he threatened to hit India with duties of at least 25% starting from Friday, when his deadline for trade deals is due to expire.
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.
Spot gold was up 0.6% to $3,295.86 an ounce at 12:00 p.m. in Singapore. The Bloomberg Dollar Spot Index was down 0.1%. Silver edged higher, and platinum and palladium rose.
Source: Bloomberg
