Investing.com — Gold prices moved from flat to low in trading in Asia on Thursday, posting losses overnight as less dovish signals from the Federal Reserve offset some optimism about a massive rate cut.
The strength of bullion prices was under pressure as the dollar rose sharply on expectations that US interest rates might not fall as much as expected over the medium to long term.
The yellow metal also saw some profit-taking after hitting record highs ahead of Wednesday’s Fed decision.
rose 0.1% to $2,561.30 per ounce, while the December expiration fell 0.5% to $2,585.65 per ounce at 00:24 ET (04:24 GMT). Spot prices posted some overnight losses and retreated further from recent record highs.
The Fed cuts rates by 50 basis points, but offers a less dovish outlook
The Fed fell 50 basis points – the high end of market expectations – in its first rate cut since the COVID-19 pandemic in 2020. The central bank also announced the start of an easing cycle.
Fed Chairman Jerome Powell quelled some concerns about a slowing economy after the excessive rate cut, saying the risks were balanced between rising inflation and a weaker labor market. Powell pointed to the prospect of more rate cuts, with markets pricing in a total of 125 basis points of rate cuts by the end of the year.
But Powell also said the Fed has no intention of returning to an ultra-low interest rate environment like we saw during COVID-19, and said the Fed’s neutral rate will be much higher than before.
His comments presented a higher outlook for medium- to long-term interest rates, and somewhat reduced optimism about Wednesday’s rate cut.
Still, the prospect of lower interest rates bodes well for non-yielding assets like gold, as it lowers the opportunity cost of investing in gold bullion.
Other precious metals rose Thursday, but also posted overnight losses. rose 0.5% to $978.15 per ounce, while the price rose 0.2% to $30.755 per ounce.
The copper price is rising, the Chinese tariff decision is pending
Among industrial metals, copper prices rose on Thursday amid expectations of more stimulus from top importer China, with the country announcing an interest rate decision on Friday.
The benchmark on the London Metal Exchange rose 0.4% to $9,425.50 per tonne, while the benchmark rose 0.6% in one month to $4.2970 per pound.
The People’s Bank of China is widely expected to leave its benchmark unchanged on Friday. But continued signs of economic weakness in the country are expected to eventually lead to further LPR cuts.
