Gold price fluctuates around 3660! The Fed's dovish stance is less than expected, signaling a gradual easing.
2025-09-18 09:08:08
The Federal Reserve cut interest rates by 25 basis points on Wednesday and signaled continued easing through 2025. However, Chairman Powell's speech was less dovish than expected, sending gold prices plummeting by nearly 1%. In early Asian trading on Thursday (September 18), spot gold fluctuated around 3660, close to the previous day's closing price of 3659.79.
Precious metals prices fell after the Federal Reserve cut interest rates by 25 basis points. The latest dot plot suggests another 50 basis point cut before the end of the year, with Powell expressing caution about the pace of rate cuts. The long-awaited moment has finally arrived: despite persistently high inflation, the Fed has clearly shifted its policy focus toward achieving full employment. As expected, a majority of Fed members voted in favor of the rate cut, with only Stephen Milan dissenting, advocating for a more aggressive 50 basis point reduction.
Regarding the inflation situation, the Federal Reserve pointed out that recent data has increased and remained at a "high level". The Federal Reserve also emphasized that economic growth has slowed down in the first half of 2025.
At the same time, the latest released Summary of Economic Projections (SEP) shows that the median federal funds rate is expected to reach 3.60% by the end of the year, which means there is still room for an interest rate cut of 50 basis points this year.
Federal Reserve Chairman Powell stated at a press conference that labor demand has weakened and inflation remains elevated . He emphasized that the balance of risks has "shifted" and that current policy is well-positioned to respond to economic changes. He also noted that the labor market is precarious. When asked about the discussion of a 50 basis point rate cut, he clarified that "broad support was not found at this meeting," adding that policymakers are in no rush to implement easing policies.
After the Federal Reserve cut interest rates by 25 basis points, the US dollar index (DXY) rose by about 0.50%. During the early Asian trading session on Thursday, it fluctuated around the previous trading day's closing price (97.00) and is now at 96.93.
U.S. Treasury yields rose steadily, with the 10-year Treasury yield rising 4.5 basis points to 4.079%. In early Asian trading on Thursday, the real yield, adjusted for inflation expectations, surged 4 basis points to 1.70%.
U.S. economic data showed that new housing starts in August plummeted to the lowest level since May, down 8.5% month-on-month (the previous value was a 3.4% increase), from 1.429 million units to 1.307 million units, and building permits also fell 3.7%.
On Tuesday, the U.S. Department of Commerce announced that retail sales grew 0.6% month-on-month in August, far exceeding market expectations of 0.2%. The control group sales used to calculate GDP grew 0.7% month-on-month, an increase from 0.5% in July.
Following the release of the U.S. economic data, the Atlanta Fed's GDPNow model lowered its forecast to 3.3% from 3.4% on Tuesday after adding the housing data.
Deutsche Bank and other institutions expect the Federal Reserve to cut interest rates by 25 basis points at each of the remaining three meetings this year, which means that the federal funds rate will eventually fall to the range of 3.50%-3.75%.
Gold prices hit a record high of $3,707.35 per ounce on Wednesday before plummeting sharply and consolidating around $3,660 on Thursday. After a period of sideways trading, the precious metal may still have the momentum to challenge its all-time high again, with upward targets targeting $3,750 and $3,800.
The 14-day relative strength index (RSI) continues to send overbought signals, indicating that short-term upside is limited, but the overall trend remains bullish.
If the Fed's "buy expectations, sell facts" policy causes gold prices to fall again, the primary support level is $3,650. If it falls below this level, the next target will be the September 11 low of $3,613 (slightly above the psychological level of $3,600).
(Spot gold daily chart, source: Yihuitong)
At 09:07 Beijing time, spot gold was trading at $3658.94 per ounce.
Precious metals prices fell after the Federal Reserve cut interest rates by 25 basis points. The latest dot plot suggests another 50 basis point cut before the end of the year, with Powell expressing caution about the pace of rate cuts. The long-awaited moment has finally arrived: despite persistently high inflation, the Fed has clearly shifted its policy focus toward achieving full employment. As expected, a majority of Fed members voted in favor of the rate cut, with only Stephen Milan dissenting, advocating for a more aggressive 50 basis point reduction.
Regarding the inflation situation, the Federal Reserve pointed out that recent data has increased and remained at a "high level". The Federal Reserve also emphasized that economic growth has slowed down in the first half of 2025.
At the same time, the latest released Summary of Economic Projections (SEP) shows that the median federal funds rate is expected to reach 3.60% by the end of the year, which means there is still room for an interest rate cut of 50 basis points this year.
Federal Reserve Chairman Powell stated at a press conference that labor demand has weakened and inflation remains elevated . He emphasized that the balance of risks has "shifted" and that current policy is well-positioned to respond to economic changes. He also noted that the labor market is precarious. When asked about the discussion of a 50 basis point rate cut, he clarified that "broad support was not found at this meeting," adding that policymakers are in no rush to implement easing policies.
Gold prices plummet as dollar rebounds
After the Federal Reserve cut interest rates by 25 basis points, the US dollar index (DXY) rose by about 0.50%. During the early Asian trading session on Thursday, it fluctuated around the previous trading day's closing price (97.00) and is now at 96.93.
U.S. Treasury yields rose steadily, with the 10-year Treasury yield rising 4.5 basis points to 4.079%. In early Asian trading on Thursday, the real yield, adjusted for inflation expectations, surged 4 basis points to 1.70%.
U.S. economic data showed that new housing starts in August plummeted to the lowest level since May, down 8.5% month-on-month (the previous value was a 3.4% increase), from 1.429 million units to 1.307 million units, and building permits also fell 3.7%.
On Tuesday, the U.S. Department of Commerce announced that retail sales grew 0.6% month-on-month in August, far exceeding market expectations of 0.2%. The control group sales used to calculate GDP grew 0.7% month-on-month, an increase from 0.5% in July.
Following the release of the U.S. economic data, the Atlanta Fed's GDPNow model lowered its forecast to 3.3% from 3.4% on Tuesday after adding the housing data.
Deutsche Bank and other institutions expect the Federal Reserve to cut interest rates by 25 basis points at each of the remaining three meetings this year, which means that the federal funds rate will eventually fall to the range of 3.50%-3.75%.
Technical Outlook: Gold hovers around $3,690, bulls eye record high
Gold prices hit a record high of $3,707.35 per ounce on Wednesday before plummeting sharply and consolidating around $3,660 on Thursday. After a period of sideways trading, the precious metal may still have the momentum to challenge its all-time high again, with upward targets targeting $3,750 and $3,800.
The 14-day relative strength index (RSI) continues to send overbought signals, indicating that short-term upside is limited, but the overall trend remains bullish.
If the Fed's "buy expectations, sell facts" policy causes gold prices to fall again, the primary support level is $3,650. If it falls below this level, the next target will be the September 11 low of $3,613 (slightly above the psychological level of $3,600).
(Spot gold daily chart, source: Yihuitong)
At 09:07 Beijing time, spot gold was trading at $3658.94 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
