FX.co ★ Gold Pares Losses

On Thursday, gold prices hovered around $2,230 per ounce, experiencing a modest rebound after dipping from their highs earlier in October. This movement came as markets absorbed the implications of the Federal Reserve's recent actions, including a technical liquidity measure. The Fed implemented a widely anticipated 25-basis-point reduction, and statements made by Fed Chair Powell were perceived as slightly dovish, prompting traders to increase expectations for potential further easing. However, the policy statement and accompanying dot plot indicated that the pace of additional cuts would remain contingent on future conditions. Concurrently, the Federal Reserve revealed plans to commence the purchase of approximately $40 billion in short-term Treasury bills. This initiative aims to alleviate pressures in money markets, potentially curbing the upward trend in short-term yields and bolstering precious metals. The value of the dollar weakened to the mid-98 range, while yields on U.S. 10-year Treasury bonds declined towards the low 4 percent range, reducing the holding costs of gold and fueling the price recovery. Additionally, geopolitical tensions and continuous central bank purchases, particularly China's increased gold reserves, provided underlying structural support for gold prices.