Gold price falls after record high following interest rate cut by US Federal Reserve
Gold prices were unchanged on Wednesday as investors weighed the possibility of an excessive rate cut by the U.S. Federal Reserve later in the day.
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Gold prices fell after hitting an all-time high on Wednesday following the US Federal Reserve’s half-percentage point interest rate cut.
Spot gold fell 0.4% to $2,560.29, after rising to $2,592.39 an ounce. US gold futures The price closed 0.2% higher at $2,598.60.
“Gold is rising to an all-time high, but bond yields have also soared. 50 basis points is good for gold,” said Tai Wong, an independent metals trader based in New York.
“Gold is in a bull market; it will likely continue to rise. The speed of that move will depend on Powell’s tone.”
With a reduction of half a percentage point, the US Federal Reserve initiated what is expected to be a gradual easing of monetary policy on Wednesday.
Policymakers expect the Fed’s benchmark interest rate to fall another half a percentage point by the end of this year and another full percentage point in 2025.
Lower interest rates reduce the opportunity cost of holding unprofitable gold bars and put pressure on the dollar, making gold cheaper for investors who hold other currencies.
Following the Fed’s rate cut, the dollar fell 0.5% against its peers – its lowest level since July 2023.
Investors are now eagerly awaiting Chairman Jerome Powell’s comments at 18:30 GMT for further guidance on policy.
Meanwhile, spot silver rose 0.6 percent to $30.93 an ounce after hitting a two-month high on Monday.
“After a recent sell-off, silver prices are recovering as gold prices rise. Both speculative and ETF (exchange-traded fund) holdings for silver are increasing,” ANZ said in a statement.
Platinum remained stable at $981.10 per ounce. Palladium lost 3.2% to settle at $1,081.00.
