Gold prices staged a dramatic recovery on Thursday, rallying more than 1.5% after the Federal Reserve delivered an anticipated 25-basis-point rate cut, despite Chair Jerome Powell’s unexpectedly cautious commentary that initially sent the precious metal tumbling. The yellow metal now trades at $3,995, buoyed by falling Treasury yields and renewed geopolitical tensions.
On Wednesday, the Federal Open Market Committee delivered its widely anticipated quarter-point rate reduction, bringing the benchmark rate to a range of 3.75%-4%. However, the 10-2 vote split revealed significant internal disagreement about the appropriate policy stance, underscoring divisions within the committee about the economy’s trajectory and inflation risks.
Federal Reserve Governor Stephen Miran dissented in favor of a more aggressive 50-basis-point cut, suggesting concerns that the current pace of monetary easing may prove insufficient to support economic activity. Conversely, Kansas City Fed President Jeffrey Schmid voted to maintain rates unchanged, signaling worries about cutting too quickly and potentially reigniting inflationary pressures.
The divided vote marks a notable departure from the unanimous or near-unanimous decisions that characterized much of the Fed’s policy path in recent years, suggesting heightened uncertainty among policymakers about the economic outlook.
Despite lacking official data, the FOMC collected state unemployment claims and said that the jobs market is not deteriorating sharply.“
— Jerome Powell on Labor Market Assessment
