Gold prices declined in the European market on Thursday, extending losses for the second consecutive day and moving further away from their all-time highs, under pressure from ongoing profit-taking and the rebound of the US dollar in the foreign exchange market.

In line with expectations, the Federal Reserve cut interest rates by 25 basis points to a range of 4.25%, the lowest level since late 2022, with Jerome Powell adopting a cautious stance regarding further monetary easing in the near term.

Price Overview

• Gold prices today: Gold fell by 0.7% to $3,634.09 from the opening level of $3,659.54, with a session high of $3,662.40.

• At Wednesday’s settlement, gold lost 0.8%—its first decline in four sessions—after earlier reaching a new record high of $3,707.65 per ounce.

US Dollar

The US Dollar Index rose about 0.4% on Thursday, extending gains for the second straight session as it continued recovering from a three-and-a-half-year low at 96.22 points, reflecting ongoing strength in the currency against a basket of global peers.

In addition to bargain buying, the rebound came after the Fed’s cautious tone on the prospect of further rate cuts in the coming period.

Federal Reserve

At the conclusion of its sixth monetary policy meeting of 2025, and as widely expected, the Federal Reserve on Wednesday lowered interest rates by 25 basis points to 4.25%—the lowest since November 2022—after five consecutive meetings of keeping rates unchanged.

The decision, supported by a majority of the FOMC, saw only one dissenting vote from Stephen Miran, who preferred a 50 basis-point cut. It was the first rate cut of 2025 and the first under President Donald Trump’s administration.

The Fed’s policy statement cited a notable slowdown in job growth in recent months, alongside downward revisions to previous employment data, reflecting weakening momentum and rising labor market risks.

While acknowledging economic weakness, the Fed noted that inflation remains above its 2% target and pointed to new tariffs imposed by the Trump administration as adding to price pressures.

Economic Projections

The Fed’s quarterly economic outlook report, released Wednesday, included the following adjustments:

• Economic growth: Raised for 2025 from 1.4% to 1.6%, for 2026 from 1.6% to 1.8%, and for 2027 from 1.8% to 1.9%.

• Headline inflation: Left unchanged at 3.0% for 2025, raised from 2.4% to 2.6% for 2026, and kept at 2.1% for 2027.

• Core inflation: Held at 3.1% for 2025, raised from 2.4% to 2.6% for 2026, and left unchanged at 2.1% for 2027.

• Target rate: Lowered from 4.0% to 3.75% for 2025, from 3.5% to 3.25% for 2026, and from 3.25% to 3.0% for 2027.

Jerome Powell

Fed Chair Jerome Powell said Wednesday that the slowdown in GDP growth largely reflects weaker consumer spending, signaling waning domestic economic momentum.

He noted that while the inflationary impact of Trump’s tariffs could be short-term under the Fed’s baseline scenario, prolonged restrictive trade policies could exert longer-lasting pressures.

Powell acknowledged that it was no longer accurate to describe the labor market as strong, citing slower hiring and recent downward revisions to job data.

He stressed that there was no need to rush into additional cuts, affirming that monetary policy will remain data-dependent.

On the voting outcome, Powell said there was no broad support within the committee for a 50 basis-point cut.

US Interest Rates

• The Fed’s median projections point to an additional 50 basis points of cuts in 2025.

• Members’ forecasts suggest one 25 basis-point cut in 2025 and another in 2026.

• Following the meeting, CME’s FedWatch tool showed October cut expectations easing, with odds of a 25 basis-point cut dropping from 100% to 87%, odds of a 50-point cut falling from 3% to 1%, and odds of no change rising from 0% to 13%.

Gold Outlook

• Peter Fertig, analyst at Quantitative Commodity Research, said some disappointment weighed on gold, as the market had expected a larger drop in the opportunity cost of holding bullion.

• ANZ Bank, in a Thursday note, forecast gold to outperform in the early stages of the rate-cutting cycle, citing safe-haven demand amid a complex geopolitical backdrop.

SPDR Holdings

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, fell by 4.29 metric tons on Wednesday, bringing the total down to 975.66 metric tons—its lowest since September 12.

The British pound fell in the European market on Thursday against a basket of global currencies, extending its losses for the second consecutive day against the US dollar, moving away from its two-month high, under pressure from accelerating correction and profit-taking, in addition to the continued recovery of the US currency from multi-year lows.

This decline comes ahead of the Bank of England’s monetary policy decisions at the conclusion of its sixth regular meeting of 2025, where interest rates are widely expected to be left unchanged at 4.00%, the lowest level since February 2023.

Price Overview

GBP/USD today: The pound fell by 0.15% to $1.3609, from an opening of $1.3626, with a high of $1.3636.

On Wednesday, the pound lost 0.2% against the dollar — its first decline in three days — due to correction and profit-taking, after earlier touching a two-month high at $1.3727.

US Dollar

The US dollar index rose about 0.2% on Thursday, marking a second straight gain, continuing its recovery from a 3½-year low of 96.22, reflecting renewed strength in the greenback against a basket of global currencies.

Beyond bargain-hunting from lower levels, the dollar’s rebound followed a cautious Federal Reserve stance regarding further interest rate cuts in the coming period.

The Fed cut rates by a quarter point on Wednesday, as widely expected in global markets, and signaled that borrowing costs would be reduced steadily for the rest of this year.

Fed Chair Jerome Powell described the latest policy move as a “risk-management cut” in response to labor market weakness, but noted the central bank does not need to rush into deeper monetary easing.

UK Interest Rates

Following mixed inflation data on Wednesday, market pricing for a 25-basis-point BoE rate cut at today’s meeting remained below 20%.

Bank of England

Global markets widely expect the Bank of England to announce on Thursday that it will leave interest rates unchanged at 4.00%, the lowest since February 2023.

The BoE interest rate decision, monetary policy statement, and the vote breakdown are due at 12:00 GMT.

Governor Andrew Bailey will hold a press conference at 12:30 GMT to comment on the policy meeting’s outcome, the inflation battle, and the future path of interest rates.

Outlook for the British Pound

At Economies.com, we expect that if the Bank of England and Andrew Bailey deliver less hawkish comments than markets anticipate, odds of a rate cut in November will rise, leading to further declines in the pound.

The New Zealand dollar fell broadly in Asian trading on Thursday against a basket of major and minor currencies, extending its losses for the second consecutive day against the US dollar, retreating from a seven-week high amid accelerating correction and profit-taking, in addition to the continued recovery of the greenback from multi-year lows.

Data released in New Zealand showed a sharper-than-expected economic contraction in the second quarter, boosting expectations of deeper interest rate cuts by the Reserve Bank of New Zealand this year.

Price Overview

NZD/USD today: The New Zealand dollar dropped about 0.9% to 0.5911, from an opening of 0.5963, after touching a high of 0.5970.

On Wednesday, the kiwi ended down more than 0.4% versus the US dollar — its first loss in three sessions — after earlier hitting a seven-week high of 0.6008 amid correction and profit-taking.

US Dollar

The US dollar index rose about 0.2% on Thursday, extending gains for a second straight session, recovering from a 3½-year low of 96.22, reflecting continued rebound against a basket of global currencies.

Beyond bargain-hunting, the dollar’s rebound followed a cautious Federal Reserve stance on further rate cuts. On Wednesday, the Fed trimmed rates by a quarter-point as expected, and Chair Jerome Powell described the move as a “risk-management cut” in response to labor market weakness, stressing the Fed is in no rush to ease aggressively.

Sharp Economic Contraction in New Zealand

Fresh data showed New Zealand’s GDP shrank 0.9% in Q2, the steepest drop since Q3 last year, far worse than forecasts of a 0.3% decline. The economy had grown 0.9% in Q1.

New Zealand Interest Rates

Following the data, odds of a 25 bps cut at the October 8 RBNZ meeting jumped above 90%.

Futures pricing now points to a policy rate of 2.5% by year-end.

Westpac revised its forecast for the next RBNZ meeting to a half-point cut instead of a quarter-point.

The US Federal Reserve announced on Wednesday its decision to cut the benchmark interest rate by 25 basis points, from 4.50% to 4.25%, in a move that was broadly in line with market expectations.