By Barani Krishnan
Investing.com - {0|Gold}} settled down Thursday, but stayed above the key $1,500 level. Longs were pricing in the strength delivered to the yellow metal by the latest U.S. rate cut, while remaining unsure of the next Federal Reserve move.
U.S. gold futures for December delivery settled down $9.60, or 0.6%, at $1,506.20 per ounce on the Comex division of the New York Mercantile Exchange.
XAU/USD, reflective of trades in bullion, also hovered at the $1,500 level, rising $6.43, or 0.4%, to $1,500.56.
The Fed cut rates for the second time this year Wednesday, again by a quarter point. The federal funds rate is now 1.75% to 2%.
The rate cut has kept the U.S. dollar relatively well supported, instead of weakening it. The U.S. dollar index, which measures the greenback against a basket of six currencies, was down 0.3% on Thursday, while remaining close to the bullish 98 point level.
Gold is supposed to be a hedge against a weak dollar, but the greenback's relative strength has dumbfounded precious metals traders.
The Fed has been another problem.
The central bank has two more policy meetings for the year, in October and December, but there is no certainty it would cut rates further. Investing.com's Fed Rate Monitor Tool puts the odds of a rate cut in October at less than 50%, but forecasts another rate cut in December.
“There’s continued uncertainty over longer term interest rates,” said George Gero, managing director and precious metals analyst at RBC Wealth Management in New York.
“Strong U.S. spending and good jobs numbers are also keeping the dollar index near upper 97-98 area, holding gold at these levels," Gero said.
Since the start of September, gold had displayed little of the charm it showed in the June-August stretch, where it effortlessly hit six-year highs and seemed at one point even ready to go beyond $1,600. gold futures are down 1.5% for the month.
Notwithstanding their recent slide, bullion and futures are still up about 17% on the year.