Gold flat after bumper Fed rate cut

GOLD struggled for momentum on Thursday (Sep 19) as market participants digested Federal Reserve chair Jerome Powell’s comments after the US central bank delivered a super-sized rate cut.

Spot gold was little changed at US$2,558.00 per ounce, as at 0033 GMT. Bullion rose to a record high of US$2,599.92 on Wednesday before closing lower.

US gold futures fell 0.6 per cent to US$2,582.70.

The US dollar rose broadly, recovering from an earlier tumble caused by the Fed’s rate-cut decision. A stronger US dollar makes gold more expensive for other currency holders.

The Fed initiated a gradual easing of monetary policy with a half-percentage-point rate cut on Wednesday, anticipating an additional half-point reduction by the end of the year.

Following the rate-cut decision, Powell said he does not see any indication of a recession or even an economic downturn ahead.

He said the central bank is in no rush to cut rates and that it will move as fast or as slow as it thinks appropriate.

Traders are currently anticipating a 68 per cent chance of a 25 basis-point (bp) reduction in November and a 32 per cent chance of a 50-bp cut, according to the CME FedWatch tool.

Zero-yield bullion tends to be a preferred investment in a lower interest rate environment and during geopolitical turmoil.

Market focus is also on the initial US jobless claims data, which is due at 1230 GMT.

On the geopolitical front, hand-held radios used by Hezbollah exploded across southern Lebanon on Wednesday, making it the deadliest day since fighting with Israel began nearly a year ago.

Spot silver rose 0.5 per cent to US$30.20 per ounce, platinum edged up 0.1 per cent to US$969.45 and palladium shed nearly 1 per cent to US$1,051.43. REUTERS