Gold rises as a divided Fed cuts rates; silver hits record high

Gold prices rose on Thursday after the US Federal Reserve cut interest rates, even as policymakers remained split on the outlook for further easing next year, while silver notched another record high.

FUNDAMENTALS

* Spot gold rose 0.3% to USD 4,242.39 per ounce as of 0040 GMT.

* US gold futures for February delivery gained 1.1% to USD 4,271.30 per ounce.

* The Fed delivered a 25-basis-point rate cut in a divided vote, but signalled that borrowing costs are unlikely to drop further as it waits for clearer signs on a softening job market and inflation that “remains somewhat elevated”.

* A majority of US central bankers expect they will need to cut short-term interest rates next year, but in an unprecedented move for the Fed, six policymakers indicated they didn’t support even Wednesday’s quarter-point cut.

* Meanwhile, Fed Chair Jerome Powell said the central bank’s rate policy is well positioned to respond to whatever lies ahead for the US economy, while declining to offer any guidance on whether another cut is likely in the near term.

* Non-yielding assets such as gold tend to perform well in low-interest-rate environments.

* US job and inflation data for November will be released next week, followed by a detailed economic growth report for the third quarter.

* SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.11% to 1,046.82 tonnes on Wednesday from 1,047.97 tons on Tuesday.

* Meanwhile, spot silver gained 0.9% to USD 62.31/oz after scaling a record peak of USD 62.67. Year-to-date, prices have surged 113%, supported by rising industrial demand, falling inventories and the metal’s entry into the US critical minerals list.

* Elsewhere, platinum rose 0.2% to USD 1,658.85, while palladium fell 0.3% to USD 1,471.75.

(Reporting by Ishaan Arora in Bengaluru; Editing by Sumana Nandy)