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

Gold prices extended losses on Thursday (Sep 18) due to an uptick in the US dollar after the US Federal Reserve cut interest rates by a quarter of a percentage point, as expected, and adopted a measured rhetoric on further policy easing.

Spot gold was down 0.2 per cent at US$3,653.54 per ounce, as at 9.19 am, after hitting a record high of US$3,707.40 on Wednesday.

US gold futures for December delivery slipped 0.8 per cent to US$3,688.10.

The US dollar rose 0.2 per cent 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.

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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 per cent to 975.66 tonnes on Wednesday from 979.95 tonnes on Tuesday.

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

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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 per cent to US$41.55 per ounce, platinum gained 0.3 per cent to US$1,367.60 and palladium rose 0.4 per cent to US$1,158.94. REUTERS