Quick overview

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Gold saw a slight increase on Friday but failed to achieve a fifth consecutive weekly gain following the Federal Reserve’s interest rate cut.

XAU/USD increased and settled at $3,650.42 an ounce after reaching an all-time high of $3,707.40 on Wednesday, while December gold futures traded at $3,682.90. The yellow metal is currently trading near the flat line for the week, having dropped 1.3 percent in the last two sessions as the dollar recovered from three-year lows. This recovery followed remarks made by the US Fed. Chair Jerome Powell regarding future easing.

The US central bank made its first rate cut since December, reducing its benchmark rate to between 4 percent and 4 percent. According to the Fed’s updated “dot plot” projections, two more cuts are expected before the end of the year, but only one more cut is anticipated in 2026. The only dissenting voice was from newly appointed member Stephen Miran, who advocated for a more significant 50 basis point reduction.

Gold had been rising sharply ahead of the Fed meeting due to concerns about the Fed’s future independence and expectations of monetary easing. Given the signs of a weak labor market and an increasing risk of unemployment, markets had considered the possibility of an aggressive cut.

Chair Jerome Powell characterized the rate cut as a “risk-management” measure in response to a cooling labor market. He emphasized that policy decisions will be made at each meeting, taking into account the uncertainty surrounding inflation and economic growth.