Gold slips as dollar gains after Fed rate cut, Powell comments

Synopsis

Gold prices declined following a U.S. Federal Reserve rate cut, influenced by a stronger dollar and cautious signals regarding future policy easing. Despite hitting a record high, spot gold experienced a dip, while U.S. gold futures also slipped. Market sentiment remains mixed, with factors like geopolitical tensions and central bank buying still playing a role.

Gold prices extended losses on Thursday due to an uptick in the dollar after the U.S. Federal Reserve cut interest rates by a quarter of a percentage point, as expected, and adopted a measured rhetoric on further policy easing.

FUNDAMENTALS

* Spot gold was down 0.2% at $3,653.54 per ounce, as of 0119 GMT, after hitting a record high of $3,707.40 on Wednesday.

* U.S. gold futures for December delivery slipped 0.8% to $3,688.10.

* The dollar rose 0.2% to extend gains against its rivals, making gold more expensive for other currency holders.

* The Fed reduced rates by 25 basis points on Wednesday and indicated it will steadily lower borrowing costs for the rest of this year.

* Lower rates reduce the opportunity cost of holding non-yielding bullion.

* Fed Chair Jerome Powell characterised the policy action as a risk-management cut in response to the weakening labour market and the central bank is in a "meeting-by-meeting situation" regarding the outlook for interest rates.

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.44% to 975.66 tonnes on Wednesday from 979.95 tonnes on Tuesday.

* Gold prices have risen 39% so far this year, following 27% gains in 2024, helped by expectations for monetary easing by the U.S. Federal Reserve, lingering geopolitical tensions and strong central bank buying.

* Meanwhile, supplies of used gold jewellery and coins, typically released when investors book profits, have been scarce in India, as many expect bullion prices to continue climbing even after reaching new highs almost every week.

* Elsewhere, spot silver eased 0.3% to $41.55 per ounce, platinum gained 0.3% to $1,367.60 and palladium rose 0.4% to $1,158.94.

DATA/EVENTS (GMT)

1100 UK BOE Bank Rate Sep

1230 US Initial Jobless Clm 13 Sep

1230 US Philly Fed Business Indx Sep.

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