Gold (XAU/USD) surged on Thursday as traders responded to the Federal Reserve’s (Fed) rate cut, with bullion extending its rally despite hints of a pause in further easing. XAU/USD last traded near $4,278 after rebounding from a daily low of $4,204.
Precious metal rallies despite Powell signaling a pause
The Fed lowered rates by 25 basis points on Wednesday, marking the third cut in its easing cycle. Although Chair Jerome Powell signaled a shift to a wait-and-see stance and noted policy is now near neutral, the central bank’s guidance failed to cap gold’s upside momentum.
Softer US labor data reinforced safe-haven demand as Initial Jobless Claims missed forecasts, while September’s trade deficit narrowed, according to the US Census Bureau.
Geopolitical uncertainty also lent support, with reports of ongoing discussions involving Ukraine, the US and Russia as Kyiv submitted a revised 20-point peace proposal.
Daily digest: market movers
US Treasury yields extended their decline, with the 10-year slipping to 4.122%, while real yields fell toward 1.872%, offering a supportive backdrop for bullion. The US Dollar Index (DXY) dropped to 98.19.
US Initial Jobless Claims for the week ending December 6 rose to 236K from a revised 192K, although Continuing Claims eased to 1.838 million. The US Goods and Services Trade Balance narrowed to –$52.8 billion in September, beating expectations for a wider deficit.
The Fed’s policy statement offered few surprises, reiterating that inflation pressures remain elevated. Powell emphasized that after 175 basis points of easing this year, policy is now “in the range of neutral,” reinforcing the case for caution ahead of future decisions.
Technical analysis: gold breaks range, targets $4,300
Gold’s technical outlook strengthened after XAU/USD vaulted above $4,250 and briefly touched a six-week high at $4,285. Momentum continues to build, as reflected in an improving Relative Strength Index.
A daily close above $4,300 would open the door to $4,350 and potentially the record high at $4,381. Initial support is seen at $4,250, followed by $4,200 and the 20-day Simple Moving Average near $4,158.
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