Gold pushed back above $4,300 per ounce after the Federal Reserve delivered a widely expected 25bps rate cut, with Chairman Jerome Powell signalling that labor-market weakness and tariff-driven inflation pressures could justify further easing, according to Commerzbank commodity analyst Carsten Fritsch. Markets are now focused on potential additional cuts later this year, particularly once Powell’s successor takes office in May.
Fed cuts rates by 25bps, decision splits officials
“The gold price rose back above the $4,300 per troy ounce mark today. The last time this occurred was less than two months ago, when gold hit its latest record high. This week’s Fed meeting provided renewed support. The 25-basis-point rate cut was widely anticipated and therefore came as no surprise. However, the decision was not unanimous,” Fritsch said.
Diverging views within the Fed
Fritsch noted that two regional Fed presidents opposed the cut, while Governor Miran – appointed by former President Trump—again pushed for a deeper 50bps move. During the post-meeting press conference, Powell stated that the labor market is weaker than current data suggests, reinforcing the argument for further cuts. He also attributed elevated inflation levels to tariff effects.
Inflation impact viewed as temporary
Powell emphasized that the tariff-related inflation spike is likely a one-off impact on price levels and pointed to stable long-term inflation expectations. While signs point to a possible pause at the January meeting, the Fed has left the door open for renewed easing later in the year.
Markets eye policy direction under Powell’s successor
Commerzbank expects more substantial rate cuts than markets currently anticipate – especially after Powell’s successor is appointed in May. Kevin Hassett, a senior economic advisor to Trump and a vocal advocate for deeper rate reductions, is widely viewed as the leading candidate.
