Futures & Commodities

Gold prices rise after Fed indicates it will pause future rate cuts

Gold bars sit in a vault at the Perth Mint Refinery in Perth, Australia, on August 9, 2018.
Carla Gottgens | Bloomberg | Getty Images

Gold prices fell slightly and then rose on Wednesday having touched a one-week low in the previous session, after the U.S. Federal Reserve lowered interest rates for the third time this year and indicated a pause is ahead. 

Spot gold was up 0.57% at $1,495.10 an ounce. U.S. gold futures edged 0.5% higher to $1,497.20.

The Fed lowered the overnight lending rate to a target range of 1.5% to 1.75%. Notably, the FOMC removed the key clause  from its post-meeting statement that the Fed is committed to "act as appropriate to sustain the expansion." Removing this language signaled the central bank might be finished cutting rates. 

A weaker greenback makes dollar-denominated gold cheaper for holders for other currencies.

Supporting gold, a rally in global shares stalled on worries that a Sino-U.S. first-stage trade deal could be delayed, after a U.S. administration official said an agreement might not be completed in time for signing in Chile next month.

"The demand for bullion will remain intact because the 'phase 1' trade deal doesn't dismantle existing tariffs ... so given the deteriorating economic conditions and the swelling concerns over the global economic outlook, safe-haven assets like gold will remain supported going into 2020," FXTM'S Tan said.

Data released on Tuesday showed U.S. consumer confidence fell for a third straight month in October, further helping gold.

Technically, "we would have a first bearish signal only below $1,480, while a rebound above $1,500 could open space for another recovery to $1,520," ActivTrades chief analyst Carlo Alberto De Casa said in a note.

"As long as prices can remain above $1,460-$1,470, the main trend remains positive, despite the recent weakness."

Investors also kept a close watch on Brexit developments, where Britain is set to hold a December election after Prime Minister Boris Johnson won approval from parliament for an early ballot.

Elsewhere, silver was steady at $17.80 an ounce, while platinum was unchanged at $920 and palladium was flat at $1,781.