Gold held above $4,250 during Friday's Asian deals, buoyed by a weaker United States dollar after the Federal Reserve delivered a widely anticipated 25 basis-point rate cut, placing benchmark rates at their lowest level in three years.
By 3:40 pm AEDT (4:40 am GMT), spot gold was down 0.3% at US$4,267.77 per ounce, leaving it on track for a weekly rise of 1.7%.
Momentum in the gold market strengthened after the Fed opted for a quarter-point reduction in a split decision on Wednesday (Thursday AEDT), lowering the federal funds rate to a 3.50%–3.75% range.
The move pressured the U.S. dollar, reducing the opportunity cost of holding non-yielding assets such as gold.
U.S. economic data added further support. Figures from the Department of Labor showed that new unemployment benefit applications rose by the most in nearly four and a half years last week, signalling weakening labour market conditions.
Despite the rate cut, Fed officials indicated the central bank is likely to pause before making any further adjustments, stressing that inflation “remains somewhat elevated” and that labour market conditions require ongoing monitoring.
The CME Group FedWatch Tool shows a 75.6% probability that the Fed will leave rates unchanged at its next meeting.
Geopolitical developments, however, may temper demand for safe-haven assets. Hopes for progress toward a peace framework in Ukraine have grown after President Volodymyr Zelenskyy confirmed that Kyiv’s delegation held discussions with senior U.S. officials via video call, presenting Washington with a revised 20-point plan to end the war with Russia.
Even so, with the U.S. dollar remaining under pressure, Treasury yields easing, and the labour market showing early signs of strain, gold remains well supported heading into the end of the week.
