Gold (XAU/USD) stabilizes on Thursday after a sharp reversal following the Federal Reserve's (Fed) interest rate decision. The metal briefly spiked to a fresh all-time high near $3,707 in the immediate aftermath of the widely expected 25-basis-point (bps) rate cut on Wednesday, but gains quickly faded as the outcome had already been largely priced in. Profit-taking and a rebound in the US Dollar (USD) sent Gold lower, with the metal closing the day down 0.88%.

At the time of writing, XAU/USD is edging higher, trimming some of the previous day's losses. The metal is trading around $3,770 during the American session, rebounding from an intraday low of $3,634, and is up nearly 0.35%.

The Fed has kicked off its rate-cutting cycle and delivered its first rate cut since December, lowering the federal funds rate to the 4.00%-4.25% range. In its monetary policy statement, the Fed noted that economic activity has moderated in recent months and labor market conditions have softened, with job growth showing signs of slowing. Policymakers highlighted that inflation has eased from its peaks but remains above the 2% target, and stressed that downside risks to employment have increased.

While the decision matched expectations, markets focused on the updated dot plot, which pointed to the possibility of two additional rate cuts later this year. Fed Chair Jerome Powell emphasized that the central bank is prepared to adjust as needed, but future cuts would depend on how growth, employment, and inflation data evolve.

Source: Fxstreet