By Ashitha Shivaprasad and Anjana Anil
(Reuters) – Gold prices fell nearly 1% on Wednesday, retreating from a record high scaled earlier in the session, as market participants parsed remarks from Federal Reserve Chair Jerome Powell.
Spot gold was down 0.9% at $3,658.25 per ounce, as of 3:11 pm EDT (1911 GMT), after hitting a record high of $3,707.40. Prices have risen nearly 6% so far this month.
U.S. gold futures for December delivery settled 0.2% lower at $3,717.8.
The Fed cut interest rates by a quarter of a percentage point and indicated it will steadily lower borrowing costs for the rest of the year. Meanwhile, Powell said the Fed is in a “meeting-by-meeting situation” regarding the outlook for interest rates.
“The Fed is signalling uncertainty with Powell calling this a ‘risk-management’ cut which has triggered some quite understandable profit-taking,” said Tai Wong, an independent metals trader.
“A retracement or at least a consolidation is healthy; I don’t expect an unusually deep pullback. Unless we get below major technical support at $3,550, the short-term uptrend should remain intact,” he added.
This marks the Fed’s first rate cut of the year, following a pause in policy changes since December after lowering interest rates three times in 2024.
Gold often gains appeal when interest rates fall, as lower yields reduce the opportunity cost of holding the non-yielding asset.
Analysts say gold’s record run this year has been underpinned by sustained central bank purchases, diversification away from the U.S. dollar, resilient safe-haven demand amid geopolitical and trade frictions, and broad dollar weakness. Bullion, considered a hedge against uncertainties, has surged 39% so far this year.
Deutsche Bank raised its gold price forecast for next year to an average of $4,000 per ounce, up from $3,700.
Spot silver slipped 2.4% to $41.51 per ounce, platinum dropped 2.2% at $1,360 and palladium fell 2.6% to $1,145.44.
(Reporting by Ashitha Shivaprasad, Anjana Anil and Anushree Mukherjee in Bengaluru; Editing by Shailesh Kuber and Krishna Chandra Eluri)
