Gold Slides After Fed Cuts Rates; Traders Seek Direction
By Barani Krishnan
Investing.com - Gold futures slipped Wednesday after the Federal Reserve executed a widely anticipated rate cut that boosted the U.S. dollar and left longs in the yellow metal clueless on immediate direction.
The Fed announced the second U.S. interest-rate cut for this year, trimming rates by 25 basis points, as it did in July.
U.S. gold futures for December delivery settled up $2.40, or 0.2%, at $1,515.80 per ounce on the Comex division of the New York Mercantile Exchange, before the Fed announcement.
At 3:15 PM ET (19:15 GMT), the contract traded at $1,497.15 an ounce, down $16.25, or 1.1%.
Spot gold, reflective of trades in bullion, shed $12.30, or 0.8%, to stand at $1,489.09.
Gold’s weakening after the rate-cut announcement correlated with the strength of the U.S. dollar index, which was up 0.4% at 98.21,
“This short-term gold pullback is mainly due to the dollar index rise,” George Gero, precious metals analyst at RBC Wealth Management in New York, said in an e-mail.
“Gold pulled back somewhat as the quarter point was an expected cut, with no assurance down the road for more cuts,” Gero said. “Tomorrow’s index option expiration may add to the volatility in gold futures. This short-term gold pullback is mainly due to the dollar index rise.”
Since the start of September, gold has shown little of the charm displayed in the June-August stretch, when it effortlessly hit six-year highs and seemed at one point ready to hit $1,600. That said, bullion is still up about 16% on the year, while gold futures show a 14% gain.
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