Gold pulls back from new all-time high as Fed speakers spoil the rally
Gold reached a new milestone, trading above the previous all-time high of £2,431, but swiftly retreated as Fed speakers warned that rate cuts are still some way off.
Atlanta Fed President Raphael Bostic recounted the inflationary pressures of Q1, emphasising that there is still work to be done, although he expects inflation to ease into 2025. Governor Michael Barr echoed these sentiments, while Governor Philip Jefferson noted that the softer inflation print in April is encouraging. Overall, the tone suggested a preference to keep interest rates elevated until the committee is confident that prices are heading back to target.
Markets have adjusted expectations, now pricing in a likely rate cut in November instead of September, and noting that the Fed tends to avoid policy changes during a presidential election year. Consequently, the FOMC may consider cuts in either September and December, or in 2025.
