Gold prices turned red on Thursday after the United States Federal Reserve announced the much-awaited interest rate cut which has left investors unsure of the impact it will have on the US economy.
An industry analyst at Zaner Metals in a daily post affirms that the commodity would shrink after the announcement. “As we expected gold and to a lesser degree silver came under pressure following the ‘fact’ of the U.S. rate cut.”
The U.S. benchmark rate was reduced by a quarter of a point but there were divergent views from one part of the industry who wanted the rates to remain unchanged while the other called for a larger cut.
The analyst added, “Adding to the downward pressure in gold prices is the take away that the Fed will not be quickly enticed into another reduction.”
Gold prices for December delivery are put at GCZ19, -0.61% on Comex fell $6.80, or 0.4%, to $1,509 an ounce, while December silver is at SIZ19, -0.05% was down nearly half a cent at $17.915 an ounce.
However, Daniel Briesemann, an analyst at Commerz Bank sighted Jerome Powell, chairman, U.S. Federal Reserve in his news conference Wednesday did not give a sign of prospective further rate cuts.
He said, “Jerome Powell did not explicitly commit himself to further rate cuts.
Meanwhile, yet another significant pressure on gold and other safe-haven instruments is the realization that retaliation against Iran is apparently taking the form of fresh sanctions instead of military action.”
While investors await Trump’s sanctions on Iran, the analyst added that save haven for commodities might not come up as soon as expected.
He added, “In short, unless the Saudi government decides to launch a military strike unilaterally, a major safe haven event doesn’t appear to be likely in the coming days.”
Other metals trade for October; platinum PLV19, +0.77% rose $4.60, or 0.5%, to $939.20 an ounce, while December palladium PAZ19, +1.99% was up $23.20, or 1.5%, to $1,605.40 an ounce, with prices looking to top the record settlement they saw a week ago.
Similarly, December copper HGZ19, -0.21% was down nearly half a cent, or 0.08%, at $2.611 a pound.