Gold Breaks $3,627, Dollar Strengthens Again
Gold prices (XAU/USD) continued their correction on Thursday after a sharp reversal following the Fed's interest rate decision. After briefly surging to a new record near $3,707/oz, the rapid rally faded as the meeting's outcome was widely priced in and the US dollar strengthened again.
In the American session, gold fell and briefly broke through the $3,650 area, erasing earlier intraday gains. A stronger dollar—which makes gold more expensive for holders of other currencies—was the main drag on sentiment, followed by profit-taking after the record high.
The Fed officially began its interest rate cut cycle and lowered interest rates by 25 basis points, the first since December, bringing the federal funds rate to the 4.00%–4.25% range. In its statement, the central bank assessed that economic activity was moderating, the labor market was weakening, and inflation had eased from its peak but remained above its 2% target. Policymakers also emphasized rising risks to the employment side.
Going forward, gold's direction will be sensitive to the strength of the dollar and real yields. As long as the dollar remains strong and the market believes the Fed will not aggressively cut interest rates, the gold rally could potentially be contained. Conversely, a weakening dollar or weak US data could revive the test of the $3,680–$3,700 area.
Key points:
Gold corrected and briefly broke $3,627 after rallying to a record near $3,707.
US dollar strengthens → pressure on gold; profit-taking after the record.
The Fed cuts 25 bps (4.00%–4.25%); the economy is moderating, the labor force is weakening, inflation is >2%.
Short-term outlook: dependent on USD and real yields; a weakening dollar could support prices again. (ads)
Source: Newsmaker.id
