Gold Prices Stall as Federal Reserve’s Rate Cut Signals Less Dovish Outlook
Gold prices remained stagnant in Asian trade on Thursday, following overnight losses triggered by the Federal Reserve’s less dovish signals. The strengthening US dollar pressured bullion prices, as investors bet on less aggressive interest rate cuts in the near future. Profit-taking also weighed on gold prices after reaching record highs prior to the Fed’s decision.
At the time of writing, gold futures rose by 0.1% to $2,561.30 an ounce, while spot prices fell by 0.5% to $2,585.65 an ounce. Despite some overnight losses, gold prices have retreated from recent peaks.
The Federal Reserve announced a 50 basis point rate cut, which was at the upper end of market expectations, signaling the start of an easing cycle. Fed Chair Jerome Powell hinted at the possibility of more rate cuts in the future, with markets pricing in a total of 125 bps worth of cuts by year-end. However, Powell’s comments on a higher neutral rate dampened optimism over the rate cut.
The outlook for lower interest rates is positive for non-yielding assets like gold, as it reduces the opportunity cost of holding bullion. Other precious metals, such as silver and platinum, also saw gains on Thursday but were still recovering from overnight losses.
In the industrial metals sector, copper prices rose amid expectations of stimulus measures from China, with an interest rate decision from the country awaited. The People’s Bank of China is expected to maintain its benchmark rate unchanged, but ongoing economic weakness could lead to further cuts in the future.
Overall, the Federal Reserve’s rate cut and outlook, combined with global economic conditions, are likely to impact the prices of precious metals and industrial metals in the coming days. Investors should closely monitor these developments to make informed decisions about their investment portfolios.