Gold Reacts Sharply to FED’s Interest Rate Cut

Gold Reacts Sharply to FED’s Interest Rate Cut

The Federal Reserve has announced a widely anticipated 0.25% interest rate cut, reducing the rate from 2.50% to 2.25%. While rate cuts traditionally boost gold prices as investors seek safe-haven assets during periods of reduced savings incentives, the initial reaction was contrary.

Gold prices dropped $4.00 per ounce ahead of the announcement and saw further declines from $1430.00 to $1415.00, breaking out of the previous consolidation zone. The downward momentum was strong, signaling more room for potential declines. However, gold has since stabilized, trading within a consolidation range, and a reversal remains possible.

In a dramatic turn, President Trump’s tweet about imposing a 10% tariff on Chinese imports reignited demand for gold, pushing prices upward. The metal surged past key resistance levels, with momentum suggesting a possible climb toward the $1446.20 mark. Despite the upward trend, resistance near this level could limit further gains.

Gold’s volatile movements highlight the influence of macroeconomic decisions and geopolitical tensions, making it a key asset to watch in the current market climate.