Gold Prices Remain Flat in Asian Trade

Gold prices moved in a flat-to-low range in Asian trade on Thursday, nursing overnight losses after less dovish signals from the Federal Reserve overshadowed optimism regarding a significant rate cut.

The strength of the dollar exerted downward pressure on bullion prices as the greenback surged amid expectations that U.S. interest rates might not decrease as much as anticipated in the medium to long term.

Additionally, profit-taking occurred after gold reached record highs leading up to Wednesday’s Fed decision.

Spot gold rose 0.1% to $2,561.30 an ounce, while December gold futures decreased by 0.5% to $2,585.65 an ounce as of 00:24 ET (04:24 GMT). Spot prices continued to recover from overnight losses, moving further away from recent record highs.

Fed Cuts Rates by 50 bps

The Federal Reserve reduced its benchmark rate by 50 basis points, meeting the upper end of market expectations, marking its first rate cut since the COVID-19 pandemic in 2020. The Fed also initiated an easing cycle.

Fed Chair Jerome Powell addressed concerns about a slowing economy after the rate cut, asserting that the risks of rising inflation and a softening labor market were balanced. He indicated that further rate cuts could occur, with markets anticipating a total of 125 bps in cuts by year-end.

However, Powell emphasized that the Fed does not plan to revert to an ultra-low rate environment as during the pandemic, indicating a higher neutral rate moving forward. These comments provided a more optimistic outlook for rates in the medium-to-long term, dampening enthusiasm over Wednesday’s cut.

Despite this, the possibility of lower rates remains favorable for non-yielding assets like gold, as it reduces the opportunity cost associated with investing in bullion.

Other precious metals saw slight increases on Thursday, although they were also experiencing overnight losses. Platinum futures rose by 0.5% to $978.15 an ounce, while silver futures increased by 0.2% to $30.755 an ounce.

Copper Prices Rise amid Chinese Market Outlook

In the industrial metals sector, copper prices rose on Thursday, buoyed by expectations of additional stimulus measures from top importer China, with a crucial interest rate decision expected on Friday.

Benchmark copper futures on the London Metal Exchange saw an increase of 0.4%, reaching $9,425.50 a ton, while one-month copper futures rose by 0.6% to $4.2970 a pound.

The People’s Bank of China is anticipated to maintain its benchmark loan prime rate on Friday. However, ongoing signs of economic weakness in the country are likely to prompt further reductions in the LPR in the future.