Gold has had a terrific runup in 2025, jumping about 41%. It dipped on Wednesday in the wake of the Federal Reserve’s decision to trim the Federal Funds Rate slightly.
The new rate is a range of 4% to 4.25%; it had been 4.25% to 4.5% since December 2024. The rate is what the Fed wants member banks to charge each other for overnight loans they use to meet regulatory requirements for reserves.
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Gold hit an all-time peak of $3,744 per troy ounce just after the Fed announced its interest-rate decision at 2 p.m. EDT. The metal slipped almost immediately and was down $31.30 to $3,693.80 per troy ounce at 4:21 p.m. EDT.
That price may not last long.
Gold was $850 an ounce in January 1980; on an inflation-adjusted basis its current price is roughly equivalent, Bloomberg calculations show.
Despite the Wednesday dip, many investors and analysts say gold will move higher. In fact, the bond manager Jeffrey Gundlach told CNBC Wednesday gold might top $4,000 before year’s end.
And the yellow metal was not the only commodity to fall on Wednesday. Crude oil was off 49 cents to $64.03 a barrel. Brent crude, the global benchmark, fell 52 cents to $67.95 a barrel.
AAA said, however, that the national average price of gasoline was $3.20 a gallon Wednesday, up 1 cent from Tuesday and flat with the price a year ago.
Bond yields were higher. The 10-year Treasury yield was at 4.085% Wednesday afternoon, up from Tuesday’s 4.035%.
Related: Jobs crisis drives Fed to historic interest-rate vote as inflation rises
Perhaps ominously, one measure of mortgages showed rates moving higher. Mortgage News Daily’s survey put the rate on a 30-year mortgage at 6.22%, up from Tuesday’s 6.13%. The rate was 6.25% on Monday and had been as high as 7.1% as late as May 21.
Rates above 6% have severely hindered home sales this year. The rate is largely generated by the 10-year Treasury yield.
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A one-day dip for gold?
Gold’s decline might be a one-day phenomenon. Many investors remain bothered by several issues:
- The dollar’s fall of more than 10% against major currencies this year.
- The Fed seemed to pencil in two more rate cuts this year and more in 2026, while inflation pressures and federal government deficits are still concerns.
- President Trump wants the Fed to make much larger cuts, with one new board member, presumably Stephen Miran, projecting the rate dropping to as low as 2.25% by 2027.
Miran joined the board this week and was the lone dissenter on the rate decision. He wanted the rate cut half a point to 3.75% to 4%. He is also chairman of President Trump’s Council of Economic Advisors and will keep the job on an unpaid basis at least until January. This raises concern among economists that his position in both places could politicize the Fed.
A caveat: Gold might be overbought. The reason: Investors worried about government spending and inflation are still pouring money into the metal, according to the Chaikin Money Flow. The tool tries to estimate how much buying pressure is affecting gold.
The SPDR Gold Shares exchange-traded fund (GLD) hit $338.31 per troy ounce on Tuesday. It finished Wednesday at $336.97, down $2.62. Its RSI is 73. Above 70 suggests the commodity is overbought.
Other investment are still looking frothy. Newmont (NEM) , one of the biggest gold producers, saw its RSI nearly reach 81 on Friday. While the shares slipped on Wednesday, the RSI was just below 74.
