Gold Holds Ground after Fed's Oversized Rate Cut

FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo
FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo
TT

Gold Holds Ground after Fed's Oversized Rate Cut

FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo
FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo

Gold prices held steady on Thursday after hitting a record high in the previous session, after the US Federal Reserve delivered a super-sized interest rate cut.
Spot gold was little changed at $2,562.85 per ounce, as of 0319 GMT after scaling a record high of $2,599.92 on Wednesday.
US gold futures fell 0.4% to $2,587.40.
The Fed kicked off with a larger-than-usual half-percentage-point reduction that Chair Jerome Powell said was meant to show policymakers' commitment to sustaining a low unemployment rate now that inflation has eased.
Powell, however, said the economy remained strong, with many job market indicators like unemployment claims and even the current 4.2% unemployment rate not at worrying levels.
"In the short-term, gold is likely to see some profit taking in the next few days but gold's path remains in an upward trajectory in the longer term," said Kelvin Wong, OANDA's senior market analyst for Asia Pacific.
"Gold is likely to reach new highs between $2,640 and $2,700 this year. Softening economic data could be catalysts for higher gold prices."
Traders are currently anticipating a nearly 70% chance of a 25 basis-point reduction at Fed's November meet and a 30% chance of a 50-bp cut, according to the CME FedWatch tool.
Zero-yield bullion tends to be a preferred investment in a lower interest rate environment and during geopolitical turmoil.
Market will also keep a tab on the initial US jobless claims data, which is due at 1230 GMT.
Among other metals, spot silver rose 0.7% to $30.26 per ounce, platinum was up by 0.4% to $972.06 and palladium shed 0.2% to $1,059.97.



Trump Vows New Tariffs on Mexico, Canada and China

FILE PHOTO: US President-elect Donald Trump attends a viewing of the launch of the sixth test flight of the SpaceX Starship rocket, in Brownsville, Texas, US, November 19, 2024. Brandon Bell/Pool via REUTERS/File Photo
FILE PHOTO: US President-elect Donald Trump attends a viewing of the launch of the sixth test flight of the SpaceX Starship rocket, in Brownsville, Texas, US, November 19, 2024. Brandon Bell/Pool via REUTERS/File Photo
TT

Trump Vows New Tariffs on Mexico, Canada and China

FILE PHOTO: US President-elect Donald Trump attends a viewing of the launch of the sixth test flight of the SpaceX Starship rocket, in Brownsville, Texas, US, November 19, 2024. Brandon Bell/Pool via REUTERS/File Photo
FILE PHOTO: US President-elect Donald Trump attends a viewing of the launch of the sixth test flight of the SpaceX Starship rocket, in Brownsville, Texas, US, November 19, 2024. Brandon Bell/Pool via REUTERS/File Photo

US President-elect Donald Trump vowed on Monday to impose sweeping new tariffs on Mexico, Canada and China as soon as he takes office as part of his effort to crack down on illegal immigration and drugs.

He said he would impose a 25% tax on all products entering the country from Canada and Mexico, and an additional 10% tariff on goods from China, as one of his first executive orders.

In a series of posts to his Truth Social account, Trump vowed to hit some of the United States' largest trading partners with duties on all goods entering the country.

“On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% tariff on ALL products coming into the United States,” he wrote, according to AFP.

He said the new tariffs would remain in place “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

The President ignored the US, Mexico and Canada three-decade-old free trade agreement, now called the USMCA.

In another post, Trump said he would also be slapping China with a 10% tariff, “above any additional Tariffs,” in response to what he said was its failure to tackle fentanyl smuggling.

“No one will win a trade war,” Liu Pengyu, a spokesman for China's embassy in the United States, told AFP by email, defending Beijing's efforts to curb fentanyl smuggling.

“China believes that China-US economic and trade cooperation is mutually beneficial in nature,” Liu added.

Canada said it was “essential” to US energy supplies, and insisted the relationship benefits American workers.

“We will of course continue to discuss these issues with the incoming administration,” said the statement from Deputy Prime Minister Chrystia Freeland.

Tariffs are a key part of Trump's economic agenda, with the Republican vowing wide-ranging duties on allies and adversaries alike while he was on the campaign trail.

Many economists have warned that tariffs would hurt growth and push up inflation, since they are primarily paid by importers bringing the goods into the US, who often pass those costs on to consumers.

But those in Trump's inner circle have insisted that the tariffs are a useful bargaining chip for the US to push its trading partners to agree to more favorable terms, and to bring back manufacturing jobs from overseas.