Gold Declines After Hitting Record High, Boosted by Fed Rate Cut

Spot silver dropped 1.6% to $31.62 per ounce after hitting its highest levels since May.

Ignacio Teson•Thursday, September 26, 2024•1 min read

Gold prices fell slightly on Wednesday as investors took profits following a surge to an all-time high. The rally had been driven by expectations of another major interest rate cut by the U.S. Federal Reserve.

Spot gold declined 0.2% to $2,652.99 per ounce, after hitting a record high of $2,670.43 earlier. U.S. gold futures remained steady at $2,677.30.

Gold is now in a range where risk reduction might start to occur. Investors could pause to lock in gains after benefiting from the recent rally.

The record gold rally was fueled by the Fed’s 50-basis-point rate cut last week. Investors are betting there’s a 59% chance of another 50-basis-point cut in November, according to the CME’s FedWatch tool.

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Lower interest rates enhance gold’s appeal as the asset doesn’t yield interest.

Traders are awaiting comments from Fed Chair Jerome Powell and U.S. inflation data later this week for more clues on monetary policy.

We might see gold reach $2,700 per ounce in the coming days if labor market weakness continues and Fed officials reaffirm 50-basis-point rate cuts,

Gold has gained over 28% in 2024, with central bank easing and geopolitical issues driving its rise.

Spot silver dropped 1.6% to $31.62 per ounce after hitting its highest levels since May. Platinum gained 0.5% to $990.80, while palladium lost 1.9% to $1,036.75.

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ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.