Gold rose above $4,300 per ounce as the Fed delivered a widely expected 25bps rate cut, with Chairman Powell signaling that labor market weakness and tariffs may prompt further easing. Investors now watch for additional rate moves, especially under the Fed chair succeeding Powell in May, Commerzbank's commodity analyst Carsten Fritsch notes.

Fed cuts rates by 25bps, decision not unanimous

"The Gold price rose back above the $4,300 per troy ounce mark today. The last time this happened was less than two months ago, when the Gold price reached its latest record high. The Fed meeting in the middle of the week provided tailwinds. The 25 basis point interest rate cut had been expected and therefore came as no surprise. The decision was not unanimous."

"Two regional Fed presidents voted against an interest rate cut, while Governor Miran, appointed by US President Trump, again voted for a 50 basis point cut. At the subsequent press conference, Fed Chairman Powell said that the situation on the labor market was worse than the data currently shows. This is an argument for further interest rate cuts. Powell attributed the elevated inflation to the tariffs."

"This is assumed to be a one-off effect on the price level. Powell also referred to stable inflation expectations. Although there are signs of a pause at the next meeting in January, the door remains open for further interest rate cuts after that. We expect more significant interest rate cuts than the market, especially after Powell's successor as Fed chair takes office in May. Trump's economic advisor Hassett, who has repeatedly spoken out in favor of more significant interest rate cuts, is considered the favorite."