Published: Thursday, September 18, 2025 · 8:33 AM | Updated: Thursday, September 18, 2025 · 8:33 AM
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Gold prices retreated on Thursday morning, pulling back from record highs after the US Federal Reserve cut interest rates by a quarter of a percentage point and signalled a measured path of monetary easing for the remainder of the year.
At the time of writing, gold futures (GC=F) dropped 1.1% to $3,676.90 per ounce, while the spot price of gold retreated 0.7% to $3,647.93 a troy ounce, after hitting a record high of $3,707.40 during Wednesday’s session.
The Fed reduced rates by 25 basis points on Wednesday to 4%-4.25%. The Federal Open Market Committee projected two further cuts in 2025, but just one in 2026, reinforcing a cautious approach to monetary policy.
Chair Jerome Powell characterised the move as a “risk-management cut” in response to signs of a softening labour market and heightened employment risks.
“We’ll be taking decisions meeting by meeting,” Powell said, hinting that a series of aggressive reductions is not on the table.
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The Fed’s measured tone prompted some investors to lock in profits following gold’s (GC=F) recent surge.
“The Fed is signalling uncertainty with Powell calling this a ‘risk-management’ cut which has triggered some quite understandable profit-taking,” Tai Wong, an independent metals trader, told Reuters.
“A retracement or at least a consolidation is healthy; I don’t expect an unusually deep pullback. Unless we get below major technical support at $3,550, the short-term uptrend should remain intact,” he added.
Oil prices fell for a second trading session as traders focused on concerns over the US economy and potential oversupply, despite the US Federal Reserve’s recent interest rate cut.
Brent crude futures (BZ=F) lost 0.3% to trade at $67.75 per barrel at the time of writing, while West Texas Intermediate futures (CL=F) retreated 0.6% to $63.69 a barrel.
Typically, lower borrowing costs would support oil demand and price growth. However, analysts noted that the Fed’s decision to cut rates, alongside expectations of two additional cuts later this year, appeared to already be priced into the market.
Priyanka Sachdeva, senior market analyst at Phillip Nova, explained: “The markets’ attention was drawn not only to the easing, but also to Powell’s pessimistic statement.” She was referring to Fed chair Powell, who mentioned ongoing concerns about a weakening labour market and persistent inflation, which made the rate cuts appear more as “a risk management attempt than a demand stimulus.”
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In addition to the Fed’s cautious stance, persistent oversupply and sluggish fuel demand in the US, the world’s largest oil consumer, continued to weigh on the market. Data from the US Energy Information Administration (EIA) released on Wednesday showed a sharp drop in US crude inventories last week.
This was largely due to a record low in net imports and a near two-year high in exports. However, the report also revealed a 4 million-barrel increase in distillate inventories, far above market expectations of a 1 million-barrel increase, raising concerns about demand for fuel and putting additional pressure on oil (BZ=F, CL=F) prices.
The pound was muted against a stronger dollar ahead of the Bank of England’s interest rate decision later this Thursday.
Sterling was flat against the greenback (GBPUSD=X), trading at $1.3633, and was 0.1% lower against the euro (GBPEUR=X), trading at €1.1515.
The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was up by 0.2% to 97.1.
On Wednesday, the greenback had fallen to a three-and-a-half-year low of 96.22, as traders digested the Federal Reserve’s Summary of Economic Projections (SEP) — or “Dot Plot” — which revealed that policymakers were projecting two additional rate cuts later this year. This came after the Fed announced its widely anticipated 25 basis point (bps) rate cut, bringing the federal funds rate to a range of 4%-4.25% for the first time in 2025.
However, the dollar quickly rebounded, climbing alongside US Treasury bond yields after Powell, in his post-policy meeting press conference, adopted a cautious tone regarding further rate cuts.
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For the pound (GBPUSD=X, GBPEUR=X), analysts expect little movement in response to the Bank of England’s decision, as the market largely anticipates the BoE will keep interest rates unchanged at 4%. With this rate decision already priced in, the main focus will likely be on any subtle changes in the policy statement, as well as potential divisions within the Monetary Policy Committee (MPC) vote.
At its August meeting, the BoE lowered the benchmark rate to 4%, following an unprecedented second round of voting that resulted in a 5-4 split in favour of the move. The central bank reiterated its “gradual and careful approach” to further cuts but acknowledged that “the restrictiveness of monetary policy had fallen as Bank Rate had been reduced”.
In equities, the FTSE 100 (^FTSE) was higher on Thursday morning, up 0.1% to trade at 9,219 points. For more details on market movements, check our live coverage here.
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