PT Solid Gold Berjangka | Gold tanks as Fed Chair Powell signals cautious approach on rate cuts
Solid Gold Berjangka | Gold prices plummet as Federal Reserve Chair Jerome Powell takes a stance after the US central bank decided to cut rates. Projections suggest the Fed shifted less dovish. The XAU/USD trades around the $2,600-$2,610 range, about to fall beneath the former.
Federal Reserve Chair Jerome Powell indicated that the central bank may adopt a more cautious approach to future policy adjustments, noting that current measures are less restrictive. He emphasized that inflation risks and uncertainties remain tilted to the upside, partly explaining the dot plot changes.
Powell also projected that it could take one to two years for inflation to return to the 2% target while assuring that the labor market’s current state does not raise significant concerns about overheating.
The Federal Reserve cut rates by 25 basis points to the 4.25%-4.50% range, yet the decision was not unanimous, as Cleveland Fed President Beth Hammack opted to keep rates unchanged. When comparing the statement to the past meeting, there was little change, though traders were focused on the Summary of Economic Projections (SEP).
According to the SEP, the dot plot suggests that Fed officials see just two cuts for 2025 and two more for 2026. Officials estimate the Fed funds rate to end at 3.9% in 2025 and 3.4% in 2026.
Other projections suggest that the Fed’s favorite inflation gauge, the Core PCE, is expected to end at 2.8% in 2024, 2.5 % in 2025, and 2.2% in 2026. Regarding growth, the economy is foreseen to end at 2.5% in 2024, 2.1% in 2025, and 2% in 2026.
The Unemployment Rate is expected to end the current year at 4.4% and remain unchanged at 4.3% in 2025 and 2026.
After the data, gold prices plunged sharply as traders assessed the cut as hawkish, with just 100 basis points of easing for the next two years.
This week, investors will also focus on Thursday’s US GDP data and the Fed’s favorite inflation gauge, the core Personal Consumption Expenditures (PCE) Price Index, which could impact Bullion demand.(Cay) Newsmaker2
Source: Fxstreet SOLID GOLD BERJANGKA, SG BERJANGKA , SOLID GROUP, PT SGB , SGB