Gold prices surged to a record high on Wednesday (September 18) after the Federal Reserve cut interest rates by 25 basis points and signaled steady easing through the end of the year.

Spot gold fell 0.2% to $3,681.39 an ounce, as of 2:31 PM EDT (18:31 GMT), after hitting a record high of $3,707.40 earlier in the session. U.S. gold futures for December delivery closed 0.2% lower at $3,717.80.

The U.S. dollar continued its decline, making dollar-priced gold more attractive to holders of other currencies.

"Gold's recent record highs continue to be a result of expectations for lower interest rates going forward, and that began with today's 25 basis point rate cut," said David Meger, director of metals trading at High Ridge Futures.

This marks the Fed's first rate cut this year, following a pause in policy changes since December after cutting rates three times in 2024. This rate cut, along with projections for two more 25 basis point cuts at the remaining policy meetings this year, suggests that Fed officials have begun to downplay the risk that the Trump administration's trade policies will fuel continued inflation, and are now more concerned about weakening growth and the possibility of rising unemployment.

Gold often gains traction when interest rates fall, as lower yields reduce the opportunity cost of holding non-yielding assets. Analysts say gold's record year has been supported by continued central bank buying, diversification away from the US dollar, strong safe-haven demand amid geopolitical and trade tensions, and widespread dollar weakness.

Gold bullion, considered a hedge against uncertainty, has surged more than 40% so far this year. Looking ahead, analysts expect gold to trade in the $3,600-$3,900 range in the short to medium term and see the potential to test $4,000 next year if economic and geopolitical uncertainty persists.

Spot silver fell 1.5% to $41.9 an ounce, platinum fell 1.1% to $1,374.99, and palladium fell 0.9% to $1,165.48.(alg)

Source: Reuters