Gold prices climbed to new daily highs on Wednesday afternoon, driven by the first interest rate cut by the U.S. Federal Reserve in over four years. December gold futures rose by $14.50, reaching $2,606.60 per ounce, while December silver gained $0.06 to trade at $31.06 per ounce.
The Federal Reserve Open Market Committee (FOMC) announced a larger-than-expected reduction in its key interest rate, lowering the federal funds rate by 0.5% to a target range of 4.75% to 5.0%. While a 0.25% cut had been anticipated by many, the more aggressive move signals ongoing concerns about elevated inflation, despite signs of progress in curbing price increases.
Market participants are now keenly focused on the upcoming press conference with Federal Reserve Chairman Jerome Powell for further insights into the central bank’s monetary policy outlook. Attention also turns to the Bank of England and the Bank of Japan, both of which are scheduled to hold their own policy meetings on Thursday.
Despite heightened geopolitical tensions in the Middle East, safe-haven demand for gold and silver has been relatively muted. On Tuesday, thousands of pagers used by Hezbollah militants, including an Iranian official, exploded in Lebanon. A subsequent explosion on Wednesday, involving walkie-talkies, left at least one person dead and over 100 injured. Israel is being widely held responsible, with Hezbollah expected to retaliate.
In other key market developments, the U.S. dollar index fell sharply following the Fed’s larger rate cut. Meanwhile, Nymex crude oil prices hovered near $71.00 per barrel, and the yield on the benchmark 10-year U.S. Treasury note edged lower to 3.681%.
