Gold Tumbles as Fed’s Rate Cut Comes with Hawkish Outlook

Gold prices plummeted on December 18, 2024, following the Federal Reserve’s unexpected interest rate cut. The precious metal’s spot price dropped to $2,622 per ounce, while US gold futures fell over 2.0% to $2,606 This sharp decline caught many traders off guard, sparking a flurry of activity in the market.

The Fed’s decision to lower rates by 25 basis points was not the primary cause of gold’s tumble. Instead, it was the central bank’s cautious outlook for 2025 that rattled investors. The Fed projected fewer rate cuts next year than previously expected, prompting a reassessment of market positions.

Trading volumes surged as news spread, with gold futures contracts reaching 73,409 – far exceeding the average of 5,443. This spike in activity underscores the market’s sensitivity to monetary policy changes. Sellers quickly gained the upper hand, pushing prices down as buyers retreated.

Technical indicators now suggest a bearish short-term outlook for gold. The metal broke through key support levels, with $2,630 emerging as a critical threshold. The 50-day Exponential Moving Average at $2,652.10 now acts as resistance, potentially limiting upward movement.

Despite the immediate negative reaction, gold’s long-term prospects remain supported by several factors. Ongoing geopolitical tensions and central bank buying continue to underpin demand. Additionally, expectations of eventual monetary easing in 2025 could provide future support for gold prices.

Gold Tumbles as Fed’s Rate Cut Comes with Hawkish Outlook

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