Powell "cuts rates but remains dovish" has not committed to a rate cut in December, the dollar rises sharply, and gold is likely to "fade."

According to Zhitong Finance APP, on Wednesday, Federal Reserve Chairman Jerome Powell stated that it is not certain that there will be another rate cut at the next meeting in December after the second consecutive rate cut, leading to an increase in the dollar exchange rate. Following Powell's remarks, U.S. Treasury yields rose, and the Bloomberg Dollar Spot Index increased by as much as 0.4%, marking the largest gain since October 9. The Swiss franc and the British pound fell among major currencies, while gold may face pressure. As the market widely expected, Federal Reserve policymakers lowered the benchmark interest rate by 25 basis points on Wednesday to a range of 3.75%-4%. The decision passed with a vote of 10-2, indicating significant internal disagreement on the policy path. One official advocated for a more aggressive rate cut, while another opposed this cut. At the same time, the Federal Reserve announced that it would end the balance sheet reduction (QT) on December 1. The meeting statement did not provide forward guidance on the December policy path. The September dot plot indicated that there could be a total of three rate cuts this year, with December being the last meeting of the year. Powell stated at the press conference that there is "strong disagreement" within the committee about whether to continue cutting rates in December, emphasizing that a rate cut in December is by no means a certainty. Bank of America strategist Alex Cohen stated, "Powell's comments that a rate cut in December is not inevitable have significantly strengthened the dollar. This guidance is clearer than the market expected and contradicts the nearly fully priced expectation of a rate cut in December." The ongoing federal government shutdown has delayed the release of several economic reports, making it difficult to assess the health of the labor market and the overall economy, adding more uncertainty to the Federal Reserve's outlook. Powell defined the recent rate cuts by the Federal Reserve as "protective measures" aimed at ensuring sustained economic growth. Last year, the Federal Reserve initiated rate cuts but later paused them due to the economy and inflation consistently exceeding expectations, maintaining rates until September of this year. TD Securities strategist Jayati Bharadwaj pointed out, "If the Federal Reserve continues to characterize rate cuts as preventive measures or risk management tools, it will provide some support for the dollar." Meanwhile, gold will be under pressure. As Powell downplayed the possibility of a rate cut in December, traders have reduced their bets on further easing by the Federal Reserve. Following Powell's remarks, U.S. Treasury yields and the dollar both rose, putting pressure on gold. Gold itself does not generate interest and is priced in dollars, both of which diminish its appeal. On Thursday, gold prices hovered around $3,950 per ounce, having fallen 0.6% in the previous trading day. As of the time of writing, spot gold prices rose 0.7% to $3,957 per ounce. Silver prices increased for the third consecutive day, while platinum and palladium prices also rose. Previously, gold had experienced a strong rally, with prices briefly surpassing the historical high of $4,380 per ounce last week, but have significantly retreated in recent days. Technical indicators show that the previous rise has shown signs of overheating; at the same time, increasing signals of progress in U.S.-China trade relations have also diminished gold's appeal as a safe-haven asset Leaders of China and the United States are scheduled to meet in South Korea on Thursday, with expectations to finalize a de-escalation agreement, potentially putting the world's largest trade dispute on hold temporarily. Initial signals indicate that the leaders are preparing to reach an agreement that may involve the cancellation of some tariffs, fees, and export restrictions that have been implemented or threatened in recent months. However, despite a recent pullback, gold has still risen by about 50% this year. This surge is attributed to central banks' gold purchases and the market's preference for "currency devaluation trades," where investors avoid sovereign debt and currencies to mitigate risks associated with uncontrolled fiscal deficits. Sebastian Mullins, head of multi-asset and fixed income at Schroders, stated in a report: "The market has seen a natural pullback, but in terms of the breadth and depth of potential monetary demand, we still believe that the current gold bull market is not comparable to previous bull markets." The recent surge in gold prices has attracted both institutional and retail investors into gold ETFs (exchange-traded funds), but this week’s outflow from ETFs has weakened some of the support. Data shows that on Tuesday, the total holdings of gold ETFs declined for the fifth consecutive day, marking the longest period of reduction since May. Market observers are looking forward to the quarterly demand report from the World Gold Council, which will provide clues for assessing the scale of demand for gold from investors and central banks