(Kitco News) - The gold market is holding on to solid gains as the Federal Reserve cuts interest rates in a much-anticipated move.
The Federal Open Market Committee lowered the federal funds rate by 25 basis points, in line with expectations. The rate now trades in a range between 4.50% and 4.75%.
The central bank didn’t provide much guidance on the future path of its monetary policy, noting that the economy continues to expand at a solid pace.
“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate,” the central bank said in its monetary policy decision.
The gold market is not seeing much reaction to the 25-basis point cut. Spot gold last traded at $2,690.40 an ounce, up 1.18% on the day.
Michael Brown, Senior Market Analyst at Pepperstone, said that the Fed’s statement is pretty much a carbon copy of its previous statement. He added that there is nothing to suggest that anything has changed in the Fed’s cutting cycle.
“On the whole, the decision does little to materially alter the policy outlook, though market participants will now look to Chair Powell’s press conference, at the bottom of the hour, for any potentially more explicit hints on the pace of further rate cuts,” he said in a note. “My base case remains that the Committee will continue to deliver 25bp cuts at every meeting, until a neutral rate, around 3%, is reached next summer. Risks, though, to this path have now become more two-sided since the election.”
