For the first time since 2020, the US Federal Reserve reduced benchmark interest rates by 50 basis points, reducing the target rate range to 4.75%-5% from its prior range of 5.25% to 5.5%. The vote, which was 11:1, was not unanimous, which marked a significant shift from the Fed's previous unanimous interest rate decisions over the prior two years.
Gold prices reached an all-time high as the US Federal Reserve reduced interest rates by 50 basis points, pushing the currency down. The spot gold price was up 0.9% at $2,592.39 per ounce as of 02:17 p.m. ET (1817 GMT). US gold futures closed 0.2% higher at $2,598.60.
Gold reached all-time highs, while bond rates have also risen. A 50 basis point increase is positive for gold, according to Tai Wong, an independent metals dealer based in New York. Gold is in a bull market; it is expected to rise. Powell's tone will determine the rapidity of that motion.
The Federal Reserve began what is likely to be a gradual easing of monetary policy on Wednesday, cutting interest rates by half a percentage point.
Policymakers expect the Fed's benchmark rate to decrease by half a percentage point by the end of this year and another full percentage point in 2025. Lower interest rates reduce the opportunity cost of keeping non-yielding bullion and weigh on the dollar, making gold more affordable for investors in other currencies.
Following the Fed's move, the dollar plummeted 0.5%, reaching its lowest level versus its competitors since July 2023. Investors are now waiting for remarks from Chair Jerome Powell at 1830 GMT for any guidance on policy direction.
Meanwhile, spot silver increased 0.6% to $30.93 per ounce, having reached a two-month high on Monday. "After a recent sell-off, silver prices are returning with increasing gold prices. Silver holdings are increasing, both speculatively and through exchange-traded funds (ETFs)," according to an ANZ report. Platinum remained flat at $981.10 per ounce. Palladium was down 3.2% at $1,081.00.
