Gold Prices Plunge After the Fed Holds Interest Rates

 Global gold prices fell more than 1% after the Federal Reserve maintained its benchmark interest rate and failed to provide a clear indication of the timing of a rate cut. Strong US economic data also dampened the appeal of the yieldless precious metal. According to Reuters on Thursday (July 31, 2025), spot gold prices fell 1.5% to US$3,275.92 per troy ounce at 3:08 p.m. New York time (19:08 GMT). Meanwhile, US gold futures fell 0.8% to US$3,352.80 per ounce. The Fed decided to hold interest rates in a divided decision, without providing any certainty about when borrowing costs would be lowered. Two members of the board of governors expressed dissent at the meeting. Fed Chairman Jerome Powell stated that no decision had been made regarding a September interest rate cut, although many market participants had previously expected that to be the beginning of monetary policy easing. He added that the risks of a weakening labor market were now becoming apparent.

Tai Wong, an independent metals trader, said Powell is sticking to his stance, focusing more on controlling inflation than responding to labor market concerns. "The dollar is surging, putting additional pressure on gold, although bullion prices are still holding at the lower end of the range. A deeper correction would likely trigger renewed buying, as gold's fundamentals—uncertainty, high US debt, and the de-dollarization trend—remain strong," he said.

The ADP employment report showed that the US private sector added more jobs than expected in July, although several indicators suggest the labor market is softening. WisdomTree commodity analyst Nitesh Shah added that the more strident the Trump administration's criticism of current policy direction, the greater the potential for gold prices to rise. Gold is known as a superior hedge against uncertainty and when interest rates are low. Besides gold, other precious metals also experienced sharp declines. Spot silver plunged 3.2% to US$36.97 per ounce, hitting a nearly three-week low. Platinum fell 6.6% to US$1,303.19, its lowest since June 24, while palladium weakened 4.9% to US$1,196.75. According to Jim Wyckoff, senior analyst at Kitco Metals, this pressure was likely caused by profit-taking by short-term traders. "The gold market has been in a correction recently, and that has put additional pressure on platinum and palladium," he said.