On Thursday, gold dipped as markets reacted to Federal Reserve (Fed) Chair Jerome Powell’s comments over the post-rate cut.
In the Asian afternoon session, yellow metal futures for December contracts plummeted by -0.50% to $2,586.70 an ounce.
Meanwhile, on Wednesday, the Fed began gradually easing monetary policy by cutting rates by half a percentage point. An additional half-point reduction is expected before the end of the year.
Furthermore, after the rate-cut decision, Powell stated there were no signs of a recession or economic downturn ahead. He also emphasized that the central bank isn’t in a hurry to cut rates and will adjust its pace as necessary.
According to reports, traders expect a 68.00% chance of a 25 basis-point rate cut in November and a 32.00% chance of a 50 basis-point reduction.
Meanwhile, zero-yield bullion is often favored in a low interest-rate environment and during periods of geopolitical uncertainty.
In addition, attention is focused on the upcoming US jobless claims data, which will be released on Thursday.
On the geopolitical side, in southern Lebanon, Hezbollah’s hand-held radios exploded on Wednesday, marking the deadliest day since fighting began with Israel. The conflict has been ongoing for nearly a year.
Fed Rate Cut Decision Stains Gold Prices
Fed rate cut decisions have reduced the cost of holding gold and weakened the dollar, making it cheaper for foreign investors.
According to reports, bullion prices dipped after reaching a record high Wednesday, following the regulator’s half-point rate cut.
In addition, the US central bank began gradually easing monetary policy by cutting rates by half a percentage point.
On the other hand, after the Fed’s rate cut, the dollar dropped -0.50% against competitors, hitting its lowest level since July 2023.
More so, investors are now looking forward to Powell’s remarks to gain more insight into the future direction of monetary policy.
