Gold edges lower after Fed delivers mixed signals

Spot gold was 0.3% lower at $1,489.73 per ounce

Image used for illustrative purposes. An employee sorts gold bars in the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria, December 15, 2017.

Image used for illustrative purposes. An employee sorts gold bars in the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria, December 15, 2017.

REUTERS/Leonhard Foeger

Gold prices edged lower on Thursday as investors remained cautious after the U.S. Federal Reserve cut interest rates as expected but delivered mixed signals about its next move.


Spot gold was 0.3% lower at $1,489.73 per ounce, as of 0102 GMT. Prices fell as much as 1% in the previous session before settling down 0.6%.

U.S. gold futures were down 1.2% at $1,497.5 per ounce.

The dollar stood tall on Thursday, while Asian shares edged higher tracking some modest Wall Street gains.

The Fed cut interest rates again on Wednesday to help sustain a record-long economic expansion, but signalled a higher bar to further reductions in borrowing costs, eliciting a fast and sharp rebuke from U.S. President Donald Trump.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar.

With continued economic growth and strong hiring “the most likely outcomes”, the Fed nevertheless cited “uncertainties” about the outlook and pledged to “act as appropriate” to sustain the expansion.

U.S. homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction accelerated, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market.

The European Union warned on Wednesday that Britain was headed for a damaging no-deal Brexit, with London’s ideas for solving the contentious issue of the Irish border still unlikely to unlock a deal just six weeks before Britain is due to leave.

U.S. President Donald Trump said on Wednesday there were many options short of war with Iran after U.S. ally Saudi Arabia displayed remnants of drones and missiles it said were used in a crippling attack on its oil sites that was “unquestionably sponsored” by Tehran.

Bank of Japan policymakers will debate the feasibility of ramping up already massive stimulus on Thursday but are expected to save their limited ammunition for a while longer, despite growing risks to the country’s fragile economic recovery.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.37% to 883.60 tonnes on Wednesday from 880.37 tonnes on Tuesday.

Canadian miner Iamgold Corp would fit well with China Gold International Resource Corp Ltd’s acquisition strategy as the Chinese state-run company seeks to buy gold-producing mines, an executive with the overseas arm of China National Gold Group said on Wednesday.

DATA AHEAD 0830 UK Retail Sales MM, YY Aug 0830 UK Retail Sales Ex-Fuel MM Aug 1100 UK BOE Bank Rate Sept 1100 UK BOE QE Corp Sept 1230 US Initial Jobless Claims Weekly 1230 US Philly Fed Business Index Sept 1400 US Existing Home Sales Aug (Reporting by Eileen Soreng in Bengaluru, Editing by Sherry Jacob-Phillips)

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