Gold surpasses $4,235... The Fed's 'baby step' rate cuts boost investor sentiment

nft_widow · 2026-01-06T09:45:09+00:00

The Fed's third rate cut... Bullish momentum in gold intensifies, reaching new highsThe U.S. Federal Reserve( has stepped on the pedal of monetary easing. At the December Federal Open Market Committee)FOMC( meeting, it was decided to cut the benchmark interest rate by 25bp)0.25% point(, adjusting the operational target to 3.50~3.75%. This follows three baby step cuts this year. The market responded sensitively to this signal. The international spot gold price)XAU/USD( rose to $4,235 per ounce during Thursday's Asian trading hours, reaching a new high. The reduced opportunity cost due to the rate cut has attracted the attention of physical asset traders.

nft_widow

2026-01-06 09:45:09

Third Federal Reserve Rate Cut… Bullish Gold Buying Accelerates to Record Highs

The US Federal Reserve( has stepped on the pedal of monetary easing. At the December Federal Open Market Committee) (FOMC(), it was decided to cut the benchmark interest rate by 25bp) 0.25%(, with the operational target adjusted to 3.50~3.75%. This follows three small step rate cuts this year. The market responded sensitively to this signal. International spot gold prices)XAU/USD( rose to $4,235 per ounce during Thursday’s Asian hours, reaching a new high. The decrease in opportunity cost due to rate cuts is interpreted as sparking increased interest among physical asset traders.

Powell’s Cautious Tone Becomes a Burden… January Hold Scenario Rises to 78%

However, this optimism was short-lived. During the press conference, Federal Reserve Chair Jerome Powell stated, “We need to observe the effects of the three rate cuts so far,” which cooled market enthusiasm. What the Fed signaled was that future small steps would be more cautious.

As a result, the FedWatch indicator from the Chicago Mercantile Exchange) (CME() adjusted the probability of a rate hold in January from 70% to about 78%. The Fed’s future moves will depend on signals from the labor market. The weekly unemployment claims data to be released tonight is particularly noteworthy because the strength of the labor market is likely to influence the Fed’s policy direction.

Geopolitical Risks Are the Natural Enemy of Gold… Ukraine Peace Negotiations Near

Another factor that could halt the upward trend in gold exists. US President Donald Trump’s pressure on Ukrainian President Volodymyr Zelensky to “reach a ceasefire with Russia by Christmas” is one such factor. If peace negotiations between the two sides proceed quickly and geopolitical tensions ease, demand for gold, a typical safe-haven asset, could shrink in the short term.

Currently, the gold market is in a crossroad. On one side, there is the favorable factor of monetary policy easing; on the other, the potential negative factor of resolving international conflicts. Investors are weighing these opposing forces to gauge the future direction.

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