Gold prices fell on Friday but held around $2,700 as markets reacted to the implications of Donald Trump's presidency and the Fed's latest interest rate decision. The Fed cut interest rates by 25 basis points as expected on Thursday, while signaling a cautious and considered stance on any further rate cuts. However, markets are pricing in higher rates from the Fed, as the new US president's policies—focused on raising tariffs, cutting taxes and deregulation—are expected to widen deficits and fuel inflation.
Meanwhile, demand for gold remains strong. The World Gold Council reported that global physical gold-backed exchange-traded funds saw inflows for the sixth straight month in October. Additionally, gold prices may get an extra boost from China's new stimulus measures aimed at raising the debt ceiling of local governments to 35.52 trillion yuan, allowing them to issue an additional six trillion yuan in special bonds over three years to swap out hidden debt.
Source: Trading Economics
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