Gold prices experienced a slight decline as traders showed caution regarding the future trajectory of Federal Reserve interest rates and a strengthening dollar. The precious metal’s recent rise was stymied, with gold trading roughly $60 below Wednesday’s all-time high. This peak was reached following the Fed’s announcement of a 25 basis-point rate cut. However, the price fell after comments from Fed Chair Jerome Powell indicated a less aggressive monetary policy approach than many had anticipated. Powell described the current state as a “meeting-by-meeting situation” for future rate adjustments, instilling caution among investors.
Lower interest rates generally favor gold since the metal does not yield interest. Powell’s remarks not only influenced gold prices but also contributed to a strengthened US dollar, which negatively affects gold’s affordability in other currencies. Traders are still projecting the possibility of nearly two additional rate cuts this year, with expectations of further Fed easing serving as a significant driver behind gold’s impressive 38% surge this year. Factors supporting bullion prices also include heightened demand due to geopolitical tensions and the ramifications of President Donald Trump’s tariffs on the global economy, as well as increased central bank purchases and holdings in exchange-traded funds.
The current political landscape may further influence gold market dynamics, notably due to ongoing tensions surrounding the Fed’s independence. A legal battle is unfolding involving Fed Governor Lisa Cook, who was targeted by Trump with allegations of mortgage fraud, while economic adviser Stephen Miran has temporarily joined the Fed and was the sole dissenting vote against the recent decision, advocating for a half-point rate cut.
As of 10:40 a.m. Singapore time, gold was largely unchanged at $3,646.17 an ounce, maintaining its status for the week. The Bloomberg Dollar Spot Index showed little movement, while silver, platinum, and palladium prices experienced increases.
In corporate developments, Zijin Gold International Co., part of China’s leading mining company, is reportedly looking to raise $3.2 billion through an initial public offering in Hong Kong. This IPO is on track to be the largest of its kind since May, with trading expected to commence on September 29. Elevated gold prices have provided a conducive atmosphere for mining companies to secure funds for expansion and to manage debt.
