(Kitco News) - The gold market is trying to maintain its grip on support at $3,300 an ounce as the Federal Reserve holds its neutral monetary policy stance, even as it acknowledges slower economic growth.
As expected, the Federal Reserve left interest rates unchanged, keeping them within a range of 4.25% to 4.50%. The most notable change in the central bank’s monetary policy statement is a slight downgrade of its economic assessment, noting that the economy moderated in the first half of the year compared to the “solid pace” of growth seen in June.
“Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year,” the central bank said in its monetary policy statement.
Gold is seeing some renewed volatility in the initial reaction to the Federal Reserve’s statement. Spot gold last traded at $3,300.62 an ounce, down 0.78% on the day.
Although the Federal Reserve is maintaining its neutral monetary policy stance, dissent is beginning to emerge within the committee. Federal Reserve Governors Michelle Bowman and Christopher Waller both voted in favor of rate cuts at this meeting.
However, analysts note that the split vote was not a major surprise, as both committee members have been vocal about their dovish views.
With few surprises in the central bank’s decision, Michael Brown, Senior Market Analyst at Pepperstone, said he expects the Federal Reserve to be slightly more hawkish than markets are currently pricing in this year.
Despite its present neutral stance, markets continue to expect the Federal Reserve will cut interest rates twice this year, starting as early as September.
“My base case remains that the resilient nature of the labor market, as well as tariff-induced price pressures continuing to emerge, will keep the Fed on the sidelines for the time being. My view is still that just one 25 bp cut is likely to be delivered this year, probably at the December meeting,” Brown said.
