Gold prices fell in the European market on Friday, continuing to move in negative territory for the third consecutive day and retreating significantly from record highs, as correction and profit-taking activity persisted alongside pressure from the rise of the US currency in the foreign exchange market.
As widely expected, the Federal Reserve announced a 25-basis-point interest rate cut, bringing rates to their lowest levels in nearly three years, though it gave no signals that it was in a hurry to ease monetary policy further in the coming months.
Price Overview
•Gold prices today: Gold fell by 0.35% to $3,632.33, from the opening level of $3,644.294, recording a session high of $3,657.40.
•At Thursday’s settlement, gold lost 0.45% in its second straight daily decline, as correction and profit-taking continued from the all-time high of $3,707.65 an ounce.
•Aside from profit-taking, gold prices also came under pressure from the US dollar’s rise following positive economic data in the United States.
US Dollar
The dollar index rose by 0.15% on Friday, extending gains for a third consecutive session and reflecting the continued strengthening of the US currency against a basket of major and minor counterparts.
Beyond recovering from its lowest level in three and a half years, the dollar’s rise also came after the Federal Reserve failed to deliver the more dovish signals markets were expecting.
Federal Reserve
•In line with expectations, the Fed on Wednesday cut rates by 25 basis points, bringing them to 4.25%, their lowest since November 2022, after five consecutive meetings of holding rates steady.
•The decision passed with a majority of FOMC members in favor, except for one dissenter, Steven Mnuchin, who preferred a larger 50-basis-point cut.
•The Fed noted in its policy statement that job growth had slowed markedly in recent months, with downward revisions to prior employment data, reflecting weakening momentum and rising labor market risks.
•The Fed added that despite slowing growth, inflation remains above the 2% target, pointing out that new tariffs imposed by the Trump administration were adding further upward pressure on prices.
•In its quarterly economic projections, the Fed lowered the 2025 year-end target rate from 4.0% to 3.75%, the 2026 target from 3.5% to 3.25%, and the 2027 target from 3.25% to 3.0%.
•Fed Chair Jerome Powell described the rate cut as necessary for risk management in response to labor market weakness, saying the central bank was in a “volatile situation” regarding interest rate expectations.
•Powell added that he saw no need for rapid additional cuts, emphasizing that monetary policy would remain data-dependent, guided by inflation and growth developments.
US Interest Rates
•The Fed’s median projections point to an additional 50 basis points of rate cuts in 2025.
•Median expectations from Fed members show one 25-basis-point cut in 2025, with another similar cut expected in 2026.
•Following the meeting, CME Group’s FedWatch tool showed the market pricing for a 25-basis-point October cut falling from 100% to 87%, the probability of a 50-basis-point cut slipping from 3% to 1%, and the likelihood of no change rising from 0% to 13%.
Gold Outlook
•Kyle Rodda, market analyst at Capital.com, said: “Sentiment remains bullish, but it has definitely lost some momentum. Essentially, the Fed didn’t provide dovish-enough guidance to push gold higher.”
•Rodda added that expectations for two more cuts this year were supportive, but projections of just one cut in 2026 were higher than market pricing, which pushed yields and the dollar higher.
SPDR Fund
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Thursday, with the total remaining at 975.66 metric tons—the lowest since September 12.
