Gold Holds Firm Ahead of Expected Rate Cut

18 Sep 2024 , 11:29 AM

Gold prices remained stable on Wednesday as market participants braced for the Federal Reserve’s expected decision to decrease interest rates for the first time in over four years.

Spot gold rose 0.1% to $2,572.11 per ounce. On Monday, bullion reached a record high of $2,589.59.

US gold futures increased 0.2% to $2,598.30.

According to data released on Tuesday, U.S. retail sales surprisingly increased 0.1% in August, indicating that the economy remained stable throughout the third quarter.

At the end of its meeting later that day, the Fed will announce its interest rate decision, followed by a press conference by Chair Jerome Powell. The Fed’s last rate drop occurred in March 2020, amid the COVID-19 pandemic.

Markets are currently pricing in a 64% chance of a 50 basis point cut at the end of the two-day meeting, compared to 43% on Friday. The likelihood of a 25 basis point rate drop have shrunk dramatically after reports rekindled the prospect of further aggressive easing.

However, according to a Reuters survey, most analysts expect the US central bank to drop interest rates by 25 basis points on Wednesday, believing that the economy is not in distress enough to merit the half-point reduction predicted by financial markets.

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