Gold steady after Fed’s long-awaited rate cut
Gold prices held steady on Thursday after hitting a record high in the previous session, after the US Federal Reserve delivered a supersized interest rate cut.
Spot gold was little changed at $2,562.85/oz 3.19am GMT after scaling a record high of $2,599.92 on Wednesday. US gold futures fell 0.4% to $2,587.40.
The Fed kicked off with a larger-than-usual half-percentage-point reduction that chair Jerome Powell said was meant to show policymakers’ commitment to sustaining a low unemployment rate now that inflation has eased.
Powell, however, said the economy remained strong, with many job market indicators like unemployment claims and even the current 4.2% unemployment rate not at worrying levels.
“In the short term, gold is likely to see some profit taking in the next few days but gold’s path remains in an upward trajectory in the longer term,” said Kelvin Wong, Oanda senior market analyst for Asia Pacific.
“Gold is likely to reach new highs between $2,640 and $2,700 this year. Softening economic data could be catalysts for higher gold prices.”
Traders are currently expecting a nearly 70% chance of a 25 basis point (bp) reduction at Fed's November meet and a 30% chance of a 50bp cut, according to the CME FedWatch tool.
Zero-yield bullion tends to be a preferred investment in a lower interest rate environment and during geopolitical turmoil.
On the geopolitical front, Hezbollah devices explode again in Lebanon on Wednesday, stoking tension of wider conflict after similar explosions of the group’s pagers the day before.
Market will also keep a tab on the initial US jobless claims data, which is due at 12.30pm GMT.
Among other metals, spot silver rose 0.7% to $30.26/oz, platinum was up by 0.4% to $972.06 and palladium shed 0.2% to $1,059.97.