Gold prices (XAU/USD) edged higher on Friday, halting a two-day decline, trading around $3,663 in the US session. This move followed a wild midweek reaction to the Fed's interest rate decision.
On Wednesday, the Fed cut interest rates by 25 basis points to 4.00%–4.25%—a move fully anticipated by the market. Gold briefly touched a record near $3,707, but quickly corrected after Jerome Powell's less dovish press conference, triggering a recovery in the US dollar and Treasury yields.
Powell emphasized that there was no need to act quickly, calling the cut a "risk-management cut" to mitigate job market weakness, and emphasized that policy would be data-driven, not an aggressive easing path. Despite the dollar's strength and rising yields, gold maintained a modest rebound as the market began pricing in two more cuts by the end of the year.
Consequently, the downside risk for gold is relatively contained by the prospect of further easing, but near-term upside room remains limited by a resilient dollar and high yields. The next direction will be sensitive to comments from Fed officials and upcoming US data. (ads)
Source: FXStreet.com
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