Dollar strengthens while gold weakens post-Fed interest rate decrease
Gold retreated on Thursday from its previous session's record high, following the US Federal Reserve's indication that it will steadily lower borrowing costs for the rest of this year.
On Wednesday, prices hit a record high of $3,707.40, but on Thursday, spot gold was down 0.1% at $3,657.21/oz in morning trade. US gold futures for December delivery slipped 0.7% to $3,691.0.
The Fed, in a measured tone after a 25 basis point interest rate cut on Wednesday, signalled that it is in a 'meeting-by-meeting situation' regarding the stock market outlook. Fed chair Jerome Powell characterized the action as a risk-management cut in response to the weakening labor market.
The Fed's decision to lower interest rates has led to a stronger dollar, which makes gold more expensive for other currency holders. On Thursday, the dollar was up 0.2% against its rivals.
Despite the retreat in gold prices, analysts remain optimistic about gold's performance. ANZ expects gold to outperform early in the easing cycle, citing strong demand for haven assets amid the challenging geopolitical backdrop.
Quantitative Commodity Research analyst Peter Fertig stated that there is a bit of disappointment reflected in the gold price because the market expected that the opportunity cost for holding gold would decline more strongly than the Fed decided.
Traders are pricing in a 90% chance of another 25 bps cut at the Fed's next meeting in October, according to the CME Group's FedWatch tool.
Meanwhile, platinum gained 2% to $1,389.57, while palladium was steady at $1,154.0/oz. Spot silver rose 0.1% to $41.70/oz.
On Tuesday, September 8, 2025, the gold-based exchange-traded fund SPDR Gold Trust was managed by State Street Global Advisors, with Aakash Doshi serving as the fund’s Gold Strategy Global Head. The fund's gold reserves changed with rising inflows, contributing to a continued increase in assets and gold price resilience amid strong demand and positive market conditions. However, SPDR Gold Trust's holdings fell 0.44% to 975.66 tonnes on Wednesday.
Non-yielding bullion is performing well in a low interest rate environment, making it an attractive investment option for many investors. As the economic outlook remains uncertain, it is likely that demand for haven assets such as gold will continue to be strong.
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