Global gold prices witnessed a sharp decline this week following US Federal Reserve Chairman Jerome Powell’s cautious post-rate-cut statement. Despite the Fed’s decision to reduce interest rates by 25 basis points to 4.00–4.25%, Powell’s tone signaled a restrained approach to further easing, dampening investor expectations and triggering a “sell-the-news” reaction across bullion markets.
Gold, which had briefly surged to a record $3,707 per ounce on September 17, fell nearly 2% within hours, settling around $3,668.27 by September 18. In India, prices dropped ₹574 per 10 grams to ₹1.09 lakh, mirroring global trends.
Root Cause of the Price Drop
- Stronger US Dollar: Contrary to expectations, the dollar rallied post-Fed announcement, making gold more expensive for international buyers.
- Hawkish Fed Guidance: Powell described the rate cut as “risk management,” indicating a meeting-by-meeting approach and only two more cuts in 2025.
- Profit Booking: Investors who bought gold anticipating dovish signals exited positions after the Fed’s cautious stance, leading to a sharp intraday reversal.
- ETF Outflows: SPDR Gold Trust reported a decline in holdings, reflecting reduced institutional appetite.
Will Gold Prices Rise Again?
Analysts remain divided. While geopolitical tensions and seasonal demand in India may support prices, the absence of aggressive rate cuts and a firm dollar could limit upside potential. Experts suggest gold may hover between $3,600–$3,700 per ounce in the near term, with ₹1.08–1.12 lakh as the domestic range.