Gold prices recovered from a one-month low on Thursday, buoyed by a global flight to safety amid broad declines in equity markets.
The Federal Reserve’s hawkish stance, announced on Wednesday (Thursday AEDT), dampened risk appetite, triggering haven flows into the precious metal.
The Fed's decision to reduce its benchmark policy rate for the third time since September was widely anticipated. However, its guidance on a slower pace of rate cuts in 2025 heightened market caution.
The central bank’s dot plot indicated that the federal funds rate could drop to 3.9% in 2025, implying just two 25-basis-point reductions, down from four cuts previously forecast in September.
This cautious outlook propelled U.S. Treasury yields to multi-month highs, with the benchmark 10-year yield climbing to its highest level since May.
The elevated yields supported the U.S. dollar, which retained its position near two-year highs.
Traders now turn their attention to U.S. economic indicators for further cues. Thursday’s release of the final Q3 GDP print and jobless claims data will provide short-term impetus.
Meanwhile, Friday's U.S. Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, is also expected to influence the U.S. dollar and gold prices in the near term.