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Gold maintains gains after Fed's meeting
Gold prices rose in the European market on Thursday, extending gains for a third consecutive session, supported by a weaker US dollar after the latest Federal Reserve meeting delivered a less-hawkish tone than markets had anticipated.
As expected, the Federal Reserve cut its benchmark rate by 25 basis points to a range of 3.75 percent — the lowest since September 2022 — marking a third consecutive rate cut.
Price Overview
• Gold prices today: Spot gold rose 0.45 percent to $4,247.81, from an opening level of $4,228.27, after touching an intraday low of $4,210.44.
• At Wednesday’s settlement, gold gained 0.5 percent, marking a second straight daily advance as investors increased safe-haven buying following the Fed meeting.
US Dollar
The US dollar index fell 0.1 percent on Thursday, deepening losses for a second session, and reached a two-month low of 98.54, reflecting continued weakness in the currency against a basket of major peers.
The outcome of the Fed meeting strengthened expectations for two additional rate cuts next year, compared with the Fed’s median projection of a single 25-basis-point cut.
Nick Rees, head of macro research at Monex Europe, said the most important takeaway was the Fed’s tilt toward easier policy in both the statement and Chair Jerome Powell’s press conference.
Federal Reserve
At the final policy meeting of 2025, the Fed cut rates by 25 basis points to 3.75 percent, as widely expected — the lowest since September 2022 and the third cut in a row.
The vote was not unanimous: nine members supported the cut, two preferred to hold rates steady, and one argued for a larger 50-basis-point move.
The Fed said economic activity continues to expand at a moderate pace, while job gains have slowed and unemployment has edged higher. It also noted that inflation remains elevated.
Economic Projections
The Fed’s quarterly projection report included several key revisions:
• Economic growth: Raised to 1.7 percent for 2025 (from 1.6 percent), to 2.3 percent in 2026 (from 1.8), and to 2.0 percent in 2027 (from 1.9).
• Headline inflation: Lowered to 2.9 percent in 2025 (from 3.0), to a range of 2.4–2.6 percent in 2026, while keeping 2027 at 2.1 percent.
• Core inflation: Lowered to 3.0 percent in 2025 (from 3.1), to 2.5 percent in 2026 (from 2.6), and kept at 2.1 percent for 2027.
• Policy rate: The Fed kept its rate projections unchanged — 3.75 percent for 2025, 3.5 percent for 2026, and 3.25 percent for 2027.
Jerome Powell
Powell said there was “broad agreement” behind the decision, noting that most members supported a 25-basis-point cut and stressing that the Fed remains focused on price stability and maximum employment.
He added that the US economy continues to outperform peers in terms of inflation, labor-market health, and growth. Powell said the Fed does not view rate hikes as a likely scenario going forward, but will adjust policy as data and risks evolve.
Gold Outlook
Tim Waterer, chief market analyst at KCM Trade, said gold’s upside remains limited because the Fed’s underlying message was that any additional cuts would likely be very modest.
SPDR Gold Trust
Holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, fell by 1.15 metric tons on Wednesday — the fourth daily decline — bringing total holdings to 1,046.82 metric tons, the lowest since 3 December.
Euro extends gains to two-month high on strong demand
The euro rose in European trading on Thursday against a basket of global currencies, extending gains for a second consecutive session against the US dollar and marking its highest level in two months. The move came amid strong demand for the single currency as one of the most attractive investment opportunities in the foreign-exchange market, especially after the interest-rate gap between Europe and the United States narrowed further.
The US dollar deepened losses after the Federal Reserve’s meeting delivered a tone that was less hawkish than markets had anticipated, encouraging investors to increase their bets on two additional rate cuts in 2026.
European Central Bank President Christine Lagarde highlighted the recent improvement in economic activity across the eurozone and hinted that growth forecasts could be revised higher at next week’s policy meeting.
Price overview
• EUR/USD today: the euro rose 0.1% to 1.1707 dollars — its highest since 17 October — from an opening level of 1.1695 dollars, after touching a low of 1.1690 dollars.
• The euro ended Wednesday up 0.6% against the dollar — its first gain in five sessions and the strongest daily rise since 16 September — supported by the outcome of the Federal Reserve meeting.
US dollar
The dollar index fell 0.1% on Thursday, deepening losses for a second straight session and hitting a two-month low of 98.54, reflecting continued weakness in the US currency against a basket of global peers.
The Federal Reserve on Wednesday cut interest rates by 25 basis points at the conclusion of its final meeting of the year, lowering the target range to 3.75% — the lowest since September 2022 — marking a third consecutive rate cut.
However, Fed Chair Jerome Powell’s comments at the press conference were less hawkish than investors expected, surprising markets that had anticipated a more aggressive stance.
The meeting reinforced market expectations for two additional rate cuts next year, compared with the Fed’s median projection of just one 25-basis-point cut.
Nick Rees, head of macro research at Monex Europe, said: “For us, the key takeaway was the tilt toward monetary easing in both the updated policy statement and Chair Powell’s press conference.”
Christine Lagarde
ECB President Christine Lagarde said Wednesday that the eurozone economy has shown notable resilience amid global trade tensions and that growth is now approaching its potential pace — a shift that could prompt the ECB to lift its growth forecasts at next week’s policy meeting.
Speaking at a Financial Times event, Lagarde noted that the ECB raised its projections during the last forecasting round, adding that “we may do so again in December.” She pointed to improving sentiment indicators — particularly in business and manufacturing — as well as labor-market data that continue to show economic strength.
Lagarde reiterated that monetary policy is “in a good place,” which investors interpret as a signal that no rate adjustments are currently needed.
European interest rates
• Market pricing for a 25-basis-point rate cut by the ECB in December remains below 10%.
• Reuters sources indicated that the ECB is likely to keep rates unchanged at the upcoming December meeting.
Interest-rate gap
Following the Fed’s decision, the interest-rate gap between Europe and the United States narrowed to 160 basis points in favor of US rates — the smallest spread since May 2022 — a development that supports further appreciation in the euro against the US dollar.
Yen extends recovery on Fed's stance
The Japanese yen rose in Asian trading on Thursday against a basket of major and minor currencies, extending its recovery for a second consecutive session against the US dollar, supported by a wave of selling in the greenback after the Federal Reserve’s meeting delivered a tone that was less hawkish than markets had expected.
The Bank of Japan meets next week, and markets now broadly expect a 25-basis-point rate increase. Investors will be watching Governor Kazuo Ueda closely for clearer guidance on the policy path through 2026.
Price overview
• USD/JPY today: the dollar fell about 0.35% against the yen to 155.49¥, from the opening level of 156.00¥, after touching a high of 156.01¥.
• The yen ended Wednesday up 0.5% against the dollar — its first gain in four sessions — rebounding from a two-week low of 156.96 yen, supported by the outcome of the Fed meeting.
US dollar
The dollar index fell 0.1% on Thursday, deepening losses for a second straight session and hitting a two-month low of 98.54, reflecting continued weakness in the US currency against a basket of global peers.
The Federal Reserve on Wednesday cut interest rates by 25 basis points at the conclusion of its final meeting of the year, bringing the target range down to 3.75% — the lowest since September 2022 — marking a third consecutive cut.
However, Fed Chair Jerome Powell’s comments at the press conference were less hawkish than investors anticipated, surprising markets that had expected a more aggressive tone.
Nick Rees, head of macro research at Monex Europe, said: “For us, the key takeaway was the tilt toward monetary easing in both the policy statement updates and Chair Powell’s press conference.”
Japanese interest rates
• Following recent inflation and wage data in Japan, market pricing for a 25-basis-point rate hike at the December meeting has stabilized above 80%.
• Governor Kazuo Ueda last week offered a more optimistic outlook on Japan’s economy, saying the Bank of Japan would examine the benefits and drawbacks of raising rates at its upcoming policy meeting.
• Three government officials told Reuters the central bank is likely to raise interest rates in December.
Bank of Japan
The Bank of Japan meets next week with strong expectations for a 25-basis-point hike, which would lift the policy rate to around 0.75% — the highest level since 2008, before the global financial crisis.
Markets will focus on Governor Ueda’s guidance for 2026, at a time when expectations are mounting that the Japanese government may pursue further fiscal expansion, adding complexity to the policy outlook for the BOJ.
