Gold fell for a second day, while sustaining its hold above $1,400 an ounce, after the Federal Reserve signaled it probably won’t embark on a lengthy easing cycle following the first rate cut since the financial crisis.
The drop came as investors reacted to the bank paring the target range for the benchmark rate by a quarter point, a move that was widely expected. Still, markets were whipsawed on remarks from Fed Chairman Jerome Powell, who struggled to define the path ahead. Two Fed rate-setters dissented.
Gold’s facing a setback after rallying in recent months to a six-year high as central banks globally signaled that looser monetary policy is needed to boost growth. Powell said the quarter-point reduction amounted to a “mid-term policy adjustment,” fueling speculation the central bank is not necessarily at the start of an easing cycle, but he also said the Fed hasn’t ruled out further cuts. A gauge of the dollar rose to the highest level in two months.
Spot gold declined as much as 0.8% to $1,402.94 an ounce and was at $1,407.64 at 11:54 a.m. in London. In July, the precious metal hit $1,453.09, the highest intraday price since May 2013, and it’s still up almost 10% this year. Silver lost 1.6% to $16.0044 an ounce, while platinum and palladium also dropped.
Source : Bloomberg