Gold rises as a divided Fed cuts rates; silver hits record high

[BENGALURU] Gold prices rose on Thursday (Dec 11) after the US Federal Reserve cut interest rates, even as policymakers remained split on the outlook for further easing next year, while silver notched another record high.

Spot gold rose 0.3 per cent to US$4,242.39 per ounce as at 8.40 am.

US gold futures for February delivery gained 1.1 per cent to US$4,271.30 per ounce.

The Fed delivered a 25-basis-point rate cut in a divided vote, but signalled that borrowing costs are unlikely to drop further as it waits for clearer signs on a softening job market and inflation that “remains somewhat elevated”.

A majority of US central bankers expect they will need to cut short-term interest rates next year, but in an unprecedented move for the Fed, six policymakers indicated they did not support even on Wednesday’s quarter-point cut.

Meanwhile, Fed chair Jerome Powell said the central bank’s rate policy is well positioned to respond to whatever lies ahead for the US economy, while declining to offer any guidance on whether another cut is likely in the near term.

Non-yielding assets such as gold tend to perform well in low-interest-rate environments.

US job and inflation data for November will be released next week, followed by a detailed economic growth report for the third quarter.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.11 per cent to 1,046.82 tonnes on Wednesday from 1,047.97 tonnes on Tuesday.

SEE ALSO

Indonesia to levy gold export duties from Dec 23

Gold edges lower as dollar climbs to near one-week high ahead of Fed verdict

Meanwhile, spot silver gained 0.9 per cent to US$62.31/oz after scaling a record peak of US$62.67. Year-to-date, prices have surged 113 per cent, supported by rising industrial demand, falling inventories and the metal’s entry into the US critical minerals list.

Elsewhere, platinum rose 0.2 per cent to US$1,658.85, while palladium fell 0.3 per cent to US$1,471.75. REUTERS