Spot gold eased 0.2% at $3,681.39 per ounce after hitting a record high of $3,707.40 earlier in the session. U.S. gold futures for December delivery settled 0.2% lower at $3,717.8.
The U.S. dollar extended its fall, making greenback-priced gold more appealing to holders of other currencies.
“Gold reaching up to new all-time highs continues to be a result of the expectations of a lower interest rate environment to come, and that started with today’s 25 basis point rate cut,” said David Meger, director of metals trading at High Ridge Futures.
This marks the Fed’s first rate cut of the year, following a pause in policy changes since December after lowering interest rates three times in 2024.
The rate cut, along with projections showing two more 25 basis point reductions at the remaining policy meetings this year, indicate Fed officials have begun to downplay the risk the Trump administration’s trade policies will stoke persistent inflation, and are now more concerned about weakening growth and the likelihood of rising unemployment.
Gold often gains appeal when interest rates fall, as lower yields reduce the opportunity cost of holding the non-yielding asset.
Analysts say gold’s record run this year has been underpinned by sustained central bank purchases, diversification away from the U.S. dollar, resilient safe-haven demand amid geopolitical and trade frictions, and broad dollar weakness.
Bullion, considered a hedge against uncertainties, has surged more than 40% so far this year.
Looking ahead, analysts expect gold to trade in a $3,600-$3,900 range in the near-to-medium term and see potential for it to test $4,000 next year if economic and geopolitical uncertainties persist.