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Gold prices edged higher on Thursday after the US Federal Reserve delivered a divided interest rate cut, while signalling caution on the outlook for further easing.
Gold futures (GC=F) rose 0.4% to $4,242.70 an ounce, while spot gold climbed 0.2% to $4,217.23 at the time of writing.
The moves followed the Fed’s decision on Wednesday to cut rates by 25 basis points in a split vote, putting it in a range of 3.50% to 3.75% – its lowest level in three years – accompanied by guidance that borrowing costs may not fall again soon as policymakers wait for clearer evidence of a cooling labour market and inflation that, in their words, “remains somewhat elevated.”
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Lower interest rates tend to support non-yielding assets such as gold (GC=F).
Investors are now focused on US jobs and inflation data for November due next week, followed by a detailed third quarter economic growth report.
The metal’s record-breaking rally this year has drawn attention, yet US investors remain only marginal holders. Goldman Sachs (GS) said gold (GC=F) ETFs accounted for just 0.17% of private US financial portfolios in the second quarter, a tiny share of the roughly $112tn Americans hold in stocks and bonds.
The bank’s analysis also shows that fewer than half of large US institutions managing more than $100m have any gold (GC=F) ETF exposure. Among those that do, typical allocations range from 0.1% to 0.5%. For major long term investors, about 0.2% of portfolios are held in gold.
Oil prices eased on Thursday as investors shifted their attention back to Ukraine-Russia peace talks and assessed possible repercussions from a US seizure of a sanctioned tanker off the coast of Venezuela.
Brent crude futures (BZ=F) lost 0.9% to $61.30 per barrel, while the West Texas Intermediate (CL=F) retreated by 1% to $57.90.
Emril Jamil, senior oil analyst at LSEG, said “so far, the seizure has not trickled down to the market, but further escalation will impose heavy crude price volatility.” He added that “the market remains in limbo, eyeing the Russian-Ukraine peace deal progress.”
US president Donald Trump said on Wednesday that “we have just seized a tanker on the coast of Venezuela, large tanker, very large, largest one ever, actually, and other things are happening.” Officials did not identify the vessel, though British maritime risk group Vanguard said the tanker, Skipper, was believed to have been seized off Venezuela.
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Investors were meanwhile focused on progress in Ukraine-Russia peace talks. The leaders of Britain, France and Germany held a call with Trump to discuss the latest US efforts to end the war in Ukraine, describing it as a “critical moment” in the process.
Reports that Ukraine struck a vessel from Russia’s shadow fleet lent some support to prices, according to IG market analyst Tony Sycamore. “These developments are likely to keep crude oil (BZ=F, CL=F) above our key $55 support level into year end, barring an unexpected peace deal in Ukraine,” Sycamore said.
Sterling was struggling against its major peers in early European trading, weighed down by a rebound in the US dollar.
Sterling was muted against the dollar, at $1.3374, and 0.2% lower versus the euro, trading at €1.1422.
The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six major currencies, climbed to 98.66.
The Fed’s latest projections showed only one cut pencilled in for next year, but chair Jerome Powell signalled that further rate increases are effectively off the table, a shift welcomed by traders. Futures markets responded by pricing in a strong chance of two or more cuts in 2026.
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Powell told reporters that policymakers need time to assess how this year’s three reductions filter through the US economy, adding that he will scrutinise incoming data ahead of the January meeting. The Fed’s forecasts point to a single cut next year, though Powell said new information could alter the outlook.
Sterling was also under pressure from expectations that the Bank of England could soon follow with its own easing. Markets are pricing an almost 88% chance of a BoE cut next week after data indicated that inflationary pressures have softened.
In equities, the FTSE 100 (^FTSE) was muted on Thursday morning, trading at 9,661 points. For more details on market movements, check our live coverage here.
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