Gold prices fell on Thursday after losing the momentum that had pushed it to near a one-week high. This decline followed the US Federal Reserve's decision to implement a split interest rate cut, leaving investors uncertain about the pace of monetary easing expected next year.
Tim Waterer, chief market analyst at KCM Trade, said gold was unable to build on the previous session's gains because the Fed's message suggested that any further interest rate cuts would be limited and spaced out.
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The Federal Reserve's decision and its impact on market expectations
The Fed approved a 25-basis-point cut in a divided vote on Wednesday, but hinted that borrowing costs may not fall further for now, as it awaits clearer signs of a slowing labor market and a decline in inflation, which remains fairly high.
Although a majority of monetary policymakers anticipate the need for further rate cuts next year, six members—an unprecedented move—opposed even the most recent cut. Federal Reserve Chair Jerome Powell also declined to provide any timeline for future reductions.
Non-yielding assets such as gold typically benefit from falling interest rates, which increases their sensitivity to Federal Reserve decisions.
Investors are now looking ahead to next week's US jobs and inflation data for November, followed by a detailed report on third-quarter economic growth.
Gold at settlement yesterday
Gold prices fell at the close of trading on Wednesday, despite widespread expectations that the Federal Reserve would cut borrowing costs at its final meeting of 2025.
Gold futures for February delivery fell 0.27%, or $11.50, to $4,224.70 an ounce.
Gold now
Spot gold fell 0.4% to $4,210.88 an ounce, after hitting its highest level since December 5 at the start of the session.
Meanwhile, US gold futures for February rose 0.3% to $4,238.10 an ounce.
Performance of other metals
Spot silver rose 0.2% to $61.90 an ounce after hitting a record high of $62.88 during the session, bringing its year-to-date gains to 113%. This strong performance was driven by increased industrial demand, declining inventories, and silver's inclusion on the U.S. list of vital metals.
Tastylive's head of global macro strategy, Ilya Spivak, said silver has paid little attention to external factors and has continued to rise independently, adding that he sees no signs of a trend reversal at present.
Spivak noted that the next important level for silver lies near $64.
Platinum rose 0.1% to $1,657.25, while palladium fell 0.1% to $1,473.68.
