Gold gains as dollar retreat, Fed rate cut buoy appeal

Gold prices rose on Thursday, supported by a pullback in the dollar and an interest rate cut from the US Federal Reserve, although signs of progress in US-China trade talks kept gains in check.

Spot gold was up 0.6% at $3,953.04 per ounce, as of 0529 GMT.

US gold futures for December delivery slipped 0.9% to $3,964.50 per ounce.

The dollar index fell 0.2% after hitting a two-week high against its rivals in the previous session, making gold less expensive for other currency holders.

“There’s no catalyst for the rally other than a bit of a technical bounce. A lot has gone against gold this week. The looming US-China trade deal diminishes trade and geopolitics as a tailwind,” said Capital.com analyst Kyle Rodda.

“The hawkish cut from the Federal Reserve and the drop in the odds for another rate cut in December are also negative for gold. I think gold could keep pulling back given this dynamic. Although, in the long run the trend is to the upside for gold.”

The US central bank cut interest rates by a quarter of a percentage point for the second time this year, bringing the benchmark overnight rate to a target range of 3.75%–4.00%.

Fed Chair Jerome Powell said officials are struggling to reach a consensus about what lies ahead for monetary policy and that financial markets should not assume another rate cut will happen at the end of the year.

Non-yielding gold thrives in a low interest rate environment and during economic uncertainties.

Meanwhile, US President Donald Trump said he had struck a deal to reduce tariffs on China in exchange for Beijing resuming US soybean purchases, keeping rare earths exports flowing and cracking down on the illicit trade of fentanyl.

His remarks after face-to-face talks with Chinese President Xi Jinping in the South Korean city of Busan, marked the finale of Trump’s whirlwind Asia trip on which he also touted trade breakthroughs with South Korea, Japan and Southeast Asian nations.

Elsewhere, spot silver eased 0.2% to $47.48 per ounce, platinum gained 0.6% to $1,595.20 and palladium climbed 0.9% to $1,413.43.