Federal Reserve Chairman Powell reiterated that the Fed is in no rush to cut interest rates, which dampened expectations of a September rate cut. Spot gold prices fell 1.55%, or $51.47, to close at $3,274.88 on Wednesday (July 30), with an intraday low of $3,268.02.

As expected, the Federal Reserve voted to keep interest rates unchanged, but the decision was not unanimous. Two members of the Federal Open Market Committee (FOMC), Bowman and Waller, dissented, favoring a 25 basis point rate cut.



The Fed said in its monetary policy statement that economic activity slowed in the first half of the year. However, Powell noted that despite the slowdown, the labor market, consumer activity and the broader economy remain in relatively good shape.

While gold initially held key support at $3,300 an ounce following the statement, Powell's lack of forward guidance triggered a wave of selling pressure.

Powell stressed that important economic data still needs to be evaluated before the September policy meeting.

"We haven't made a decision for September yet, and we will consider this information, along with all the other data we receive, when we make a decision at our September meeting," he said.

While Powell avoided providing explicit guidance for the second half of the year, some analysts believed he left subtle hints for investors.

"While the Fed's statement offered investors little new information, Chairman Powell hinted in his press conference that a rate cut at the next meeting in September is more likely," said Chris Zaccarelli, chief investment officer at Northlight Asset Management. "He noted that most indicators of longer-term expectations remain consistent with our 2% inflation target and suggested the inflationary effects of tariffs are likely to be 'transitory,' reflecting a one-time adjustment in price levels."

Jeffrey Roach, chief economist at LPL Financial, also expects the Fed to start cutting interest rates after the summer. He said: "The rate-setting committee is ready to take action at its next meeting. If economic conditions weaken, the committee may cut interest rates by 0.25 percentage points in September."

But the market remains skeptical. Expectations for a rate cut declined following Powell's press conference. According to the CME FedWatch tool, the market now sees a 42% chance of a September rate cut, compared to a 60% chance before the press conference.

The Federal Reserve has been cautious about cutting interest rates this year due to concerns that President Trump's trade policies could push up inflation.

Those concerns eased recently after the U.S. government announced new trade deals with Japan and the European Union. The agreements included a 15% increase in import tariffs. However, Powell warned that the economy still faces considerable uncertainty.

“There are many, many uncertainties that need to be worked through,” he said, adding that consumers are already beginning to feel the impact of higher tariffs.

"We expect to see more of this," he said. "We know from our surveys that businesses intend to pass these costs on to consumers, but the reality is that in many cases they may not be able to do that."

Despite rising inflationary pressures, Powell concluded that based on current data, the financial position of the U.S. consumer remains strong.


Spot gold daily chart Source: Yihuitong

At 10:40 Beijing time on July 31, spot gold was quoted at $3291.02 per ounce.