Markets are trending lower after the US Federal Reserve pointed to a slowing in rate cuts in 2025.
While the Fed did cut rates overnight by another quarter of a percentage point to 4.25% in line with expectations, Chairman Jerome Powell said recent indicators suggest that economic activity has continued to expand at a solid pace.
Despite economists’ predictions of growth remaining subdued in 2025, the Fed plans to approach rate cuts more cautiously and pointed to just two 25-basis-point cuts next year instead of the anticipated three.
ANZ says a less aggressive rate cut cycle by the Fed could see gold prices come under pressure.
“Gold fell sharply after the Fed indicated it may slow its rate cuts next year,” the bank’s economists Adam Boyton, Brian Martin, and Daniel Hynes say.
“Policymakers lowered their benchmark interest rate for a third consecutive time but reined in the total cuts they expect in 2025 to 50bp.
“This led to a surge in Treasury yields and the USD, which weighed on investor appetite for gold.”
Following Powell’s speech overnight gold dropped 1% to US$2,619.70 ($4,214.33).
The S&P/ASX 200 fell sharply 149.8 points or 1.8%, to 8,159.6 points as of 10:31am AEDT. The index has lost 2.05% over the past five days, and sits 4.17% below its 52-week high.
All 11 sectors started the session in the red, with materials leading the fall on a 0.66% decline. Utilities dipped 0.47%, industrials slid 0.36% and energy edged back 0.21%.
Uranium explorer Deep Yellow (ASX:DYL) dropped 10.42% to $1.08 after telling investors it is delaying a final investment decision on its flagship Tumas Project until March 2025.
The company says the decision was made due to some delays being experienced in receiving final
costing and quotes for detailed engineering work, as well as the opportunity to undertake further
optimisation and enhancements.
Deep Yellow adds that the “small delay will not have a material impact on the project’s overall
timeline and objective of commencing production in late 2026″.
Evolution Mining (ASX:EVN) was also dragged down 5.95% to $4.67. Echo Law last week filed class action proceedings in the Federal Court of Australia against the gold producer over allegations of failure to comply with disclosure obligations and misleading and deceptive conduct during the period from July 2021 to June 2022. The lawsuit relates primarily to statements with respect to the Red Lake operations.
The S&P/ASX 200 is Australia’s leading share market index and contains the top 200 ASX-listed companies in terms of market capitalisation, and accounts for about 80% of the country’s equity market. The index is designed to measure the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalisation.
It is recognised as the institutional investable benchmark in the country.
Write to Angela East at Mining.com.au
Images: ASX & US Federal Reserve
