XAUUSD and Brent experienced fluctuations on Friday, influenced by the Federal Reserve’s decision to lower interest rates and the impending impact of the new presidential administration.The value of gold hovers just under $2,700 per ounce, following the Fed’s announcement of a quarter-point rate reduction, bringing the federal funds target range to 4.50%-4.75%.
This marks the second decrease this year, as policymakers acknowledged signs of a slowing labor market and inflation nearing the central bank’s 2% target, albeit still slightly elevated.
Fed Chair Jerome Powell emphasized the central bank’s adaptability in responding to incoming economic data, without providing specific guidance on future rate moves.
According to CME FedWatch Tool, the markets imply a 74.7% probability for a 0.25% cut in December.Brent crude oil dipped below $75 per barrel yet remained poised for a weekly gain.
Investors weighed the potential effects of the new administration on crude prices, including the possibility of increased U.S. production and tariffs that could dampen China’s economy, the world’s largest oil importer.The projected path of Hurricane Rafael, which had disrupted U.S. crude production, was expected to shift westward over the Gulf of Mexico, reducing its impact on oil fields.The Federal Reserve’s rate cut, aimed at sustaining economic growth, may provide support for oil prices.
Additionally, expectations that the new administration might impose stricter sanctions on oil-producing countries like Iran and Venezuela may too, contribute to the upward trend, as such measures could limit global supply.
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