Onome Amuge
Gold prices rose to a record high on Tuesday before paring gains, as investors reacted to fresh signals from the Federal Reserve that the central bank remains wary of both inflation and employment risks following last week’s rate cut.
Spot gold climbed as much as 0.73 per cent to $3,791 an ounce during the North American session before easing back to $3,772. Prices had earlier dipped to $3,736.
Jerome Powell, Fed chair, said the central bank’s decision to cut rates was prompted by downside risks to employment and had shifted monetary policy “to a more neutral stance. He warned, however, that two-sided risks mean there is no risk-free path, and reiterated that policy would remain data dependent.
Powell also played down the inflationary impact of tariffs, saying the reasonable base case is that tariff-driven inflation effects will be relatively short-lived. Inflation, he noted, remains somewhat elevated.
Other Fed officials struck a mixed tone. Raphael Bostic, president of the Atlanta Fed, said he was open to an inflation target range and expected further price pressures. Governor Michelle Bowman indicated she anticipated three rate cuts in 2025 to support the labour market, while Chicago Fed president Austan Goolsbee reaffirmed the bank’s commitment to returning inflation to its 2 per cent goal.
The policy backdrop coincided with softer US economic data. S&P Global’s latest surveys showed business activity slowing in September across both services and manufacturing. Investors are now awaiting figures later this week on durable goods orders, the final second-quarter GDP reading and the Fed’s preferred inflation gauge, the core personal consumption expenditures index.
Analysts said technical factors were also shaping sentiment. A daily close below $3,760 could open the way to further declines towards $3,700, while a break above $3,775 would clear the path to retest the record high and potentially breach the $3,800 threshold.
Despite signs of fatigue among buyers, momentum indicators such as the Relative Strength Index indicate the broader uptrend in gold remains intact.
