Spot Gold extended gains to a fresh 7 1/2-week high of $4,293.09/oz. on Friday, underpinned by expectations of further policy easing by the Federal Reserve.
New signs of US labor market softness only added to prospects of two Fed interest rate cuts next year. US initial jobless claims rose by 44,000 to 236,000 during the week ending December 6th, exceeding market expectations. It has been the sharpest weekly rise since March 2020.
The Federal Reserve delivered a largely anticipated rate cut this week, while noting it will wait for clearer signs on a cooling job market and inflation, which “remains somewhat elevated”.
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.
FOMC policy makers signaled just one 25 bps rate cut for next year, or the same projection as in September.
The Federal Reserve also said it would purchase about $40 billion in short-term Treasury bills in order to ease money market strains. This decision may provide additional support to precious metals.
Spot Gold was last up 0.28% on the day to trade at $4,291.12 per troy ounce.
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