Gold near $4,000 as Fed cuts and Powell warns on further easing

Gold hovered around the key $4,000 level on Tuesday as traders weighed the U.S. Federal Reserve’s recent rate cut and Chair Jerome Powell’s warning that further easing this year is not guaranteed, while a firmer U.S. dollar and signs of easing U.S.-China trade tensions capped gains. Spot gold traded near $3,990 per ounce after dipping below $4,000 earlier in the week, leaving the metal rangebound following its record highs in October.

The U.S. central bank on Wednesday lowered its benchmark rate by 25 basis points for the second time this year, bringing the target range to 3.75 to 4.00 percent. Powell’s comment that a December cut is “not a foregone conclusion” prompted markets to scale back expectations for another reduction, and traders now assign roughly a two-thirds probability of a further 25 basis point cut in December, down from above 90 percent a week earlier, according to the CME Group’s FedWatch Tool.

A stronger dollar and rising U.S. Treasury yields have undercut bullion’s appeal. When the dollar strengthens, dollar-priced gold becomes more expensive for holders of other currencies, reducing international demand. Benchmark 10-year Treasury yields retreated from recent...