New Delhi: Gold prices saw an uptick on Thursday as the US Federal Reserve announced a 25-basis point reduction in interest rates, a move that slightly weakened the US dollar and boosted demand for the precious metal.
Spot gold climbed by 0.4%, reaching $3,942.97 per ounce, while December delivery gold futures in the US slipped 1.1% to $3,955 per ounce, reflecting some profit-taking after recent gains, according to data as of 00:50 GMT.
This rate cut marked the Fed’s second reduction this year, bringing the benchmark overnight rate to a target range of 3.75% to 4.00%. The decision aligned with market expectations but was accompanied by cautious remarks from Fed Chair Jerome Powell, who highlighted ongoing disagreements among policymakers about the future direction of monetary policy. Powell warned against assuming another rate cut will automatically follow before year-end, emphasizing that future steps will depend on economic conditions.
Lower Interest Rates Bolster Gold’s Appeal
With gold offering no yield, lower interest rates often make it a more attractive investment compared to interest-bearing assets like bonds. The slight weakening of the dollar—down 0.2% after hitting a two-week peak the previous day—also made gold more affordable for buyers using other currencies, further supporting its price.
Market focus has shifted to an upcoming meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea. Trade negotiations between the two economic powerhouses remain delicate, with hopes of rekindling a fragile truce amid ongoing tensions.
US officials are reportedly seeking to revive dialogue, while the trade relationship continues to face structural challenges. Meanwhile, Trump also concluded a trade agreement with South Korean President Lee Jae Myung during the summit, expressing optimism about his talks with Xi Jinping.
Other Precious Metals and ETF Trends
The SPDR Gold Trust, the largest gold-backed exchange-traded fund globally, saw its holdings decline by 0.28% to 1,036.05 metric tonnes on Wednesday, signaling some profit-taking or shifts by investors.
Other precious metals moved higher alongside gold: silver gained 0.4% to $47.71 per ounce, platinum rose 0.6% to $1,594.90, and palladium increased 0.8% to $1,411.51.
In summary, while the Federal Reserve’s recent rate cut has kept gold prices supported, traders remain watchful of developments in global trade talks and currency movements, which will likely influence precious metals markets in the near term.
