Gold prices rallied sharply on Thursday following the U.S. Federal Reserve’s decision to cut interest rates by 25 basis points and as investors closely watched developments in U.S.-China trade negotiations. The dual factors boosted demand for the precious metal as a safe-haven asset amid global economic uncertainty.
Spot gold surged to just under $4,000 per ounce, rebounding from a three-week low earlier in the week, while U.S. gold futures also gained in tandem. The rally came after the Fed reduced its benchmark rate to a range of 3.75–4.00%, its first cut in several months, citing slower job growth and persistent inflationary pressures.
“The Fed’s decision reinforces a dovish stance that weakens the dollar and enhances the appeal of gold,” said Fiona Roberts, commodities strategist at CapitalEdge Markets. “However, the tone of the Fed statement remains cautious, meaning further cuts are not guaranteed.”
The rate adjustment has pressured the U.S. dollar and Treasury yields, both of which typically move inversely to gold prices. Analysts say the lower yields make non-yielding assets like gold more attractive to investors seeking stability.
Markets are also responding to renewed U.S.-China trade talks, with negotiators from both countries expected to reconvene in Washington next week. The talks follow a high-profile meeting between former U.S. President Donald Trump and Chinese President Xi Jinping, where discussions focused on tariffs and rare-earth exports.
“There’s still a high degree of uncertainty over whether these negotiations will produce concrete progress,” noted a report by Al Jazeera. “That uncertainty is supporting gold prices as traders hedge against geopolitical risk.”
According to Reuters, the recent momentum pushed gold back toward multi-year highs, driven by investor expectations that the Fed’s policy easing could extend into early 2026. Meanwhile, analysts at FXStreet warned that the metal could face resistance near the $4,065 per ounce mark unless economic data weakens further.
The Economic Times added that the mixed signals from the Fed—balancing concerns about inflation with the need to sustain growth—suggest gold’s upward trajectory could remain volatile in the near term.
While some investors see potential for further gains if monetary easing continues, others believe a breakthrough in U.S.-China trade relations could shift funds back into equities and riskier assets.
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