Gold prices fell on Thursday due to profit-taking, after scaling a record peak in the previous session, as markets assessed the Federal Reserve’s stance on further interest rate cuts.
The previous session saw volatile trading, with spot prices briefly touching a record high of $3,707.40 before pulling back from those levels.
The U.S. dollar index firmed 0.6%, making commodities priced in the greenback more expensive for holders of other currencies.
On Wednesday, the Fed delivered its first rate cut since December and opened the door to further easing, but tempered its message with warnings of sticky inflation, sowing doubt over the pace of future policy adjustments.
Fed Chair Jerome Powell described the policy move as a risk-management cut in response to a weakening labor market, but emphasized that the central bank is not in a hurry to begin easing.
“There was some confusion around Powell’s comment about the rate cut being a risk-management measure, and that uncertainty prompted profit-taking,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
“But, I do think (gold’s) long-term bullish trend still remains and the setback from yesterday’s all-time high is corrective in nature… every time gold makes a new high, it just lends additional credence to the $4,000 objective.”
Gold, which tends to perform well in low-interest rate environments and during periods of uncertainty, has gained nearly 39% so far this year.
