Gold pulls back on profit-taking but analysts say outlook still positive

[stack of shiny gold bars 3d illustration]
monsitj/iStock via Getty Images

Gold prices fell Thursday in a round of profit-taking after the metal reached another record intraday high in the previous session following the Federal Reserve's policy move to cut rates by 25 bps while signaling two more reductions this year.

Analysts said investors interpreted the Federal Reserve’s policy outlook as less dovish than previously expected, despite the rate cut and signals of further easing.

"Investors judged the Fed's guidance less dovish than anticipated," MUFG analyst Soojin Kim said in a note. "Chair Powell highlighted tariff-driven inflation risks and stressed a 'meeting-by-meeting' approach to further cuts, sending the dollar higher."

Gold's price drop looks like a classic "buy the rumor, sell the fact" move, considering how widely the Fed's rate cut was expected, and reflects short-term profit-taking, Julius Baer's Carsten Menke wrote, adding such profit-taking is healthy and should not be mistaken as a sign of a changing fundamental backdrop.

The U.S. dollar index gained 0.5% on Thursday, making dollar-priced commodities more expensive for holders of other currencies.

Gold, which typically performs well in low interest rate environments and during periods of uncertainty, has gained 38% YTD.

Front-month Comex gold (XAUUSD:CUR [https://seekingalpha.com/symbol/XAUUSD:CUR]) for September delivery closed -1% to $3,643.70/oz, and front-month Comex September slver (XAGUSD:CUR [https://seekingalpha.com/symbol/XAGUSD:CUR]) finished flat at $41.707/oz, the lowest settlement value for both metals in a week.

ETFs: (NYSEARCA:GLD [https://seekingalpha.com/symbol/GLD]), (NYSEARCA:GDX [https://seekingalpha.com/symbol/GDX]), (GDXJ [https://seekingalpha.com/symbol/GDXJ]), (NYSEARCA:IAU [https://seekingalpha.com/symbol/IAU]), (NYSEARCA:NUGT [https://seekingalpha.com/symbol/NUGT]), (PHYS [https://seekingalpha.com/symbol/PHYS]), (GLDM [https://seekingalpha.com/symbol/GLDM]), (AAAU [https://seekingalpha.com/symbol/AAAU]), (SGOL [https://seekingalpha.com/symbol/SGOL]), (RING [https://seekingalpha.com/symbol/RING]), (BAR [https://seekingalpha.com/symbol/BAR]), (OUNZ [https://seekingalpha.com/symbol/OUNZ]), (SLV [https://seekingalpha.com/symbol/SLV]), (PSLV [https://seekingalpha.com/symbol/PSLV]), (SIVR [https://seekingalpha.com/symbol/SIVR]), (SIL [https://seekingalpha.com/symbol/SIL]), (SILJ [https://seekingalpha.com/symbol/SILJ])

MORE ON GOLD AND GOLD MINERS

* Gold Steadies Near $3,668 As Fed Signals Cautious Rate Path [https://seekingalpha.com/article/4824148-gold-steadies-near-3668-as-fed-signals-cautious-rate-path]
* India Gold Market Update: Encouraging Start To Seasonal Demand [https://seekingalpha.com/article/4824030-india-gold-market-update-encouraging-start-to-seasonal-demand]
* China Gold Market Update: Wholesale Demand Fell In August [https://seekingalpha.com/article/4823580-china-gold-market-update-wholesale-demand-fell-august]