Investing.com – Gold prices rebounded from a one-month low on Thursday as the Federal Reserve cut interest rates as expected, but the central bank's hawkish stance on future rate cuts clouds the bullion outlook Ta.
Gold prices fell more than 2% overnight as persistently high inflation remained a major concern after the Federal Reserve's policy meeting signaled that interest rates would be tapered in 2025.
By 22:51 ET (03:51 GMT), February expiry prices fell 1.2% to $2,620.79 an ounce, while rising 1.3% to $2,618.11.
Spot gold rebounds, but outlook is bleak as interest rate cuts slow
The Fed cut interest rates by 25 basis points (bp), but has signaled that it will slow down the pace of future rate cuts.
Lower interest rates bode well for gold prices, as they reduce the opportunity cost of owning gold and make it more attractive compared to interest-bearing assets such as bonds.
However, gold futures fell sharply as interest rates are expected to remain high for an extended period after Wednesday's rate cut. The market has ruled out a rate cut in January, and now expects only two rate cuts in 2025, compared to the initial expectation of four.
Fed Chairman Jerome Powell said further interest rate cuts would depend on sustained progress in containing inflation, reflecting policy makers' adjustment to potential economic changes under President Donald Trump's incoming administration.
The Fed's hawkish stance is aimed at curbing inflation, but it also signals confidence in the resilience of the U.S. economy. This risk-on sentiment could reduce demand for safe-haven assets and further worsen the outlook for bullion.
Layoffs are expected to decline in 2025, and the economy is expected to strengthen further. The US dollar rose to a two-year high on Wednesday.
Additionally, interest rates were left unchanged on Thursday as policymakers remained cautious about Japan's economic outlook and the trajectory of inflation.
Other precious metals rose 0.7% to $928.90 an ounce, while falling 2.7% to $29.922 an ounce.
Dollar hits two-year high; copper price declines
Among industrial metals, copper prices widened Thursday's decline after the Federal Reserve's hawkish stance boosted the dollar. Support for the red metal has been limited by reports that China, the country's biggest importer, will increase its fiscal spending over the next year.
It rose 0.1% in Asian trading on Thursday, hitting its highest level in nearly two years after the Fed meeting.
The benchmark price on the London Metal Exchange fell 1.4% to $8,921.50 a tonne, but the one-month contract was little changed at $4.089 a pound.
Gold prices rebound from Fed-driven rout, hawkish comments cloud outlook – Investing.com
Investing.com – Gold prices rebounded from a one-month low on Thursday as the Federal Reserve cut interest rates as expected, but the central bank's hawkish stance on future rate cuts clouds the bullion outlook Ta.
Gold prices fell more than 2% overnight as persistently high inflation remained a major concern after the Federal Reserve's policy meeting signaled that interest rates would be tapered in 2025.
By 22:51 ET (03:51 GMT), February expiry prices fell 1.2% to $2,620.79 an ounce, while rising 1.3% to $2,618.11.
Spot gold rebounds, but outlook is bleak as interest rate cuts slow
The Fed cut interest rates by 25 basis points (bp), but has signaled that it will slow down the pace of future rate cuts.
Lower interest rates bode well for gold prices, as they reduce the opportunity cost of owning gold and make it more attractive compared to interest-bearing assets such as bonds.
However, gold futures fell sharply as interest rates are expected to remain high for an extended period after Wednesday's rate cut. The market has ruled out a rate cut in January, and now expects only two rate cuts in 2025, compared to the initial expectation of four.
Fed Chairman Jerome Powell said further interest rate cuts would depend on sustained progress in containing inflation, reflecting policy makers' adjustment to potential economic changes under President Donald Trump's incoming administration.
The Fed's hawkish stance is aimed at curbing inflation, but it also signals confidence in the resilience of the U.S. economy. This risk-on sentiment could reduce demand for safe-haven assets and further worsen the outlook for bullion.
Layoffs are expected to decline in 2025, and the economy is expected to strengthen further. The US dollar rose to a two-year high on Wednesday.
Additionally, interest rates were left unchanged on Thursday as policymakers remained cautious about Japan's economic outlook and the trajectory of inflation.
Other precious metals rose 0.7% to $928.90 an ounce, while falling 2.7% to $29.922 an ounce.
Dollar hits two-year high; copper price declines
Among industrial metals, copper prices widened Thursday's decline after the Federal Reserve's hawkish stance boosted the dollar. Support for the red metal has been limited by reports that China, the country's biggest importer, will increase its fiscal spending over the next year.
It rose 0.1% in Asian trading on Thursday, hitting its highest level in nearly two years after the Fed meeting.
The benchmark price on the London Metal Exchange fell 1.4% to $8,921.50 a tonne, but the one-month contract was little changed at $4.089 a pound.
Related News
S&P 500 futures remain steady as important inflation data nears; traders watch oil prices and the situation in Iran: Live updates
What happens now as bitcoin falls below $69,500 and tanker assaults push oil prices back over $100?
Stock futures decline as traders monitor oil prices and the Iran conflict for economic impact: Live updates
Dow drops almost 300 points amid rising oil prices due to Iran conflict: Live updates