Gold Wavers Near Record As Fed Delivers Expected Rate Cut

Gold fluctuated between gains and losses after Federal Reserve officials lowered their benchmark interest rate by a quarter percentage point and penciled in two more reductions this year following months of intense pressure from the White House to slash borrowing costs.

In their post-meeting statement, policymakers pointed to growing signs of weakness in the labor market to justify their first rate cut since December but also acknowledged that inflation has “moved up and remains somewhat elevated.” The S&P 500 climbed, Treasury yields reversed their earlier ascent, and the dollar extended its drop after the decision.

Recent softness in labor data and dovish signals from the US central bank have raised the prospect that the Fed would deliver a series of rate cuts, after leaving borrowing costs unchanged all year. Bullion typically benefits in a lower rate environment as it doesn’t pay interest.

Officials said the unemployment rate had “edged up but remains low,” adding that “downside risks to employment have risen.”

Spot gold was little changed at 3,687.86 an ounce as of 2:18 p.m. in New York, after touching a fresh record of $3,707.57 an ounce following the Fed decision.

Gold has surged about 40% this year, outpacing the S&P 500 index and other asset and earlier this month eclipsed its inflation-adjusted peak from 1980. Persistent trade and geopolitical uncertainties, along with central banks purchases and inflows into exchange-traded funds, have added to the momentum.