After months of speculation, the Federal Reserve finally initiated its long-awaited easing cycle, delivering a 50 basis point rate cut, the largest since 2020. This aggressive move provided a significant boost to the metals market, particularly gold, which surged to a series of record highs throughout the week.
Gold opened the week trading near its all-time highs, with support levels established around $2,570 per ounce. After a brief dip early in the week, the precious metal rebounded sharply following the Fed‘s announcement on Wednesday, pushing gold above $2,594 per ounce. By the end of the week, gold had reached a new record high of $2,625.79 per ounce on Friday.
This rally came amidst broader market excitement as the Fed slashed rates to stimulate the slowing U.S. economy. Jerome Powell, the Fed Chair, emphasized that the central bank aims to normalize interest rates, targeting a benchmark range of 3% to 3.5% by 2025. The aggressive rate cuts have fueled concerns about inflation risks, yet the gold market continued to react positively.
Market Outlook Mixed but Bullish
While analysts are divided on the next phase for gold, many expect continued strength. Adrian Day, president of Adrian Day Asset Management, remarked that “gold seems unstoppable” in the short term, with Western investors returning to the market amid favorable macroeconomic conditions. However, others like Marc Chandler from Bannockburn Global Forex believe the yellow metal may experience some sideways trading next week.
Sentiment among retail investors remains optimistic. According to Kitco’s latest Weekly Gold Survey, 68% of Main Street participants expect further price gains, while 47% of experts predict additional increases. Some analysts caution that profit-taking or a stock market sell-off could trigger a pullback.
Sean Lusk of Walsh Trading emphasized the longer-term implications of the Fed’s decision, expressing concerns about potential inflation risks and renewed interest in gold as global reserves continue to rise.
With the Fed committed to an accommodative monetary stance, gold is expected to remain in focus, especially as the U.S. economy faces potential headwinds in the months ahead. Analysts forecast that the next key level for gold may be around $2,685 per ounce, barring any sharp corrections or significant sell-offs.
At the close of the week, spot gold held steady above $2,620 per ounce, signaling continued investor confidence in the precious metal.
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