PT Rifan Financindo Berjangka – Gold Holds Decline After Powell Flags Pause in Fed Easing Cycle
Gold held a slight decline after Federal Reserve Chair Jerome Powell said officials won’t rush to lower US interest rates, adding that the central bank is pausing easing to see further progress on inflation.
Bullion traded near $2,760 an ounce, within about $30 of its all-time high. On Wednesday it eased 0.2%, as the Federal Open Market Committee kept interest rates unchanged. Powell told reporters that the US economy remains strong and borrowing costs are no longer as much of a restraint on activity as previously.
Following the comments, swaps traders pared back their expectations for rate reductions this year by pricing in 43 basis points of cuts compared with 48 before, with the first reduction not expected until mid-2025. Higher rates tend to pose a headwind for gold, as it doesn’t pay interest.
The Fed’s stance comes as President Donald Trump casts considerable uncertainty over the broader economic outlook by threatening to slap tariffs on imports and promising to lower taxes, both of which could put upward pressure on inflation. When asked about the potential impacts of the new administration’s policies, Powell said the central bank was in a “wait-and-see” mode.
Spot gold was little changed at $2,759.39 an ounce at 8:16 a.m. in Singapore. The Bloomberg Dollar Spot Index was down 0.2%. Silver was steady, while platinum and palladium rose.
Source : Bloomberg
Gold dips as dollar, yields climb after Fed stands pat on rates
Gold prices slipped on Wednesday as the dollar and bond yields rose after the U.S. Federal Reserve held interest rates steady, as widely expected, providing little clarity on the timing of future rate cuts.
Spot gold fell 0.4% to $2,753.86 per ounce by 02:56 p.m. ET (1956 GMT), while U.S. gold futures settled 0.1% higher at $2,779.80, widening the premium over spot gold rates.
The dollar gained 0.3%, making gold expensive for other currency holders, while yield on the 10-year U.S. Treasury notes rose, making non-yielding gold less attractive.
“Asset markets are leaking a little bit after the statement leaned a little more hawkish than expected with gold marginally lower,” said Tai Wong, an independent metals trader.
The Fed held interest rates steady and gave little insight into when further reductions in borrowing costs may take place in an economy where inflation remains above target, growth continues, and the unemployment rate is low.
The decision to hold the policy rate steady was widely anticipated following three consecutive rate cuts in 2024 that reduced the Fed’s benchmark rate by a full percentage point.
“There’s probably some level of asserting Fed independence in light of President Trump’s demand for lower interest rates,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
“But I think that the policy path remains largely unchanged. So in that sense, rate cuts on hold probably through mid-year.”
After the release of the statement, short-term interest rate futures showed that investors expect the central bank to hold off on cutting rates again until June.
Fed Chair Jerome Powell said it is too soon to say what President Donald Trump’s policies will do and the central bank will take its time assessing what the new government policy regime means.
Gold prices neared all-time highs last week after Trump called for lower interest rates. Bullion tends to thrive in a low-interest-rate environment as it yields no interest.
Elsewhere, spot silver gained 1.2% to $30.76 per ounce, platinum also added 0.5% to $946.35. Palladium was up 0.8% to $962.75. PT Rifan Financindo Berjangka.
Source: Reuters