Gold prices faced additional losses on Thursday, following the U.S. Federal Reserve’s decision to cut interest rates by a quarter of a percentage point, a move that was widely anticipated. The Fed adopted a cautious approach to future policy easing, which contributed to a strengthening dollar.
As of 0156 GMT, spot gold declined by 0.2%, trading at $3,654.29 per ounce, a decrease from Wednesday’s record high of $3,707.40. Similarly, U.S. gold futures for December delivery fell by 0.8%, reaching $3,690.
Edward Meir, an analyst at Marex, noted that the Fed’s messaging leaned toward a hawkish stance on interest rates. “They didn’t really enthusiastically endorse lower rates,” he explained. This sentiment resulted in a firming of the dollar and an increase in Treasury rates. Meir suggested that gold might be slightly overbought in the short term, and a further retracement to around $3,600 could be possible.
The dollar itself rose by 0.2%, gaining strength against other currencies, which in turn makes gold more expensive for holders of foreign currencies. The Fed’s decision to lower rates was framed by Chair Jerome Powell as a “risk-management cut,” aimed at addressing a weakening labor market. He mentioned that the central bank is evaluating the interest rate outlook on a “meeting-by-meeting” basis.
In addition to the Fed’s decision, the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a decrease in its holdings, falling 0.44% to 975.66 tonnes from 979.95 tonnes the previous day.
Year-to-date, gold prices have surged by 39%, building on a 27% increase in 2024, driven by expectations of eased monetary policies from the Fed, persistent geopolitical tensions, and robust buying from central banks.
In the broader metals market, spot silver dipped by 0.3% to $41.53 per ounce, platinum rose by 0.4% to $1,366.75, and palladium remained steady at $1,153.87.
