Gold extends gains as Fed delivers rate cut in divided vote

Spot Gold extended gains on Thursday, as the Federal Reserve delivered a largely anticipated rate cut.

Yet, the central bank noted it would wait for clearer signs on a cooling job market and inflation, which “remains somewhat elevated”.

The Fed lowered its federal funds rate target range by 25 basis points to 3.50%-3.75% at its December meeting, in line with market consensus. This way, borrowing costs were brought to their lowest level since 2022.

But, the vote was divided, as three FOMC members continued to vote against the rate reduction.

Stephen Miran voted in favor of a larger 50 bps cut, while Austan Goolsbee and Jeffrey Schmid voted for keeping interest rates on hold.

Fed Chair Jerome Powell said at the press conference that the central bank’s rate policy was well positioned to respond to whatever lies ahead for the economy.

However, Powell did not offer any guidance on the timing of the next rate cut.

Also, FOMC policy makers signaled just one 25 bps rate cut for next year, or the same projection as in September.

The US central bank revised up its 2025 GDP growth forecast to 1.7% from 1.6% in the September projection. And, the 2026 forecast was revised up to 2.3% from 1.8% previously.

Additionally, annual core PCE inflation forecasts were revised down, as follows:

– for 2025 – to 2.9% from 3.0%;
– for 2026 – to 2.4% from 2.6%.

Spot Gold was last up 0.30% on the day to trade at $4,239.29 per troy ounce.