Gold prices fluctuated between $2,565 and $2,587 during the North American session after the Federal Reserve implemented a 50 basis point rate cut and projected a fed funds rate of approximately 4.4% by the end of 2024. At the time of this report, XAU/USD had gained over 0.50%.
Key Points from the Fed’s Policy Statement
In its latest monetary policy statement, the Federal Reserve acknowledged solid economic expansion despite a rise in the unemployment rate. The statement noted that while inflation remains somewhat elevated, the Committee is increasingly confident that it is trending towards the 2% target. The Fed emphasized that risks to its employment and inflation goals are currently balanced, although the economic outlook remains uncertain.
Notably, the Fed’s decision was not unanimous. Governor Michelle Bowman dissented, advocating for a smaller 25 basis point cut.
The Summary of Economic Projections (SEP) indicated expectations for an additional 50 basis points of cuts towards the end of 2024 and 100 basis points in 2025.
Gold Market Reaction
In response to the Fed’s decision, gold prices surged to a new all-time high of $2,591. However, traders are closely awaiting the forthcoming press conference by Fed Chair Jerome Powell for further insights and potential market-moving comments.
