• Gold prices fall following a 50 bps Fed rate cut; officials project fed funds rate to reach 4.4% by 2024.
• Fed expresses confidence in nearing 2% inflation target, despite economic uncertainties and balanced mandates.
• US Treasury yields climb to 3.67%; US Dollar Index dips 0.54% to 100.49, hitting new yearly low of 100.24.

Gold prices fluctuated within the $2,565-$2,600 range during the North American session after the Federal Reserve (Fed) cut rates by 50 bps. The Fed also projected that the fed funds rate would end 2024 around 4.4%, according to the median estimate. At the time of writing, XAU/USD had erased its previous gains and is down by over 0.20%.

Fed policymakers decided to lower borrowing costs as they grew confident that inflation is moving “sustainably” toward the bank’s 2% goal. However, they acknowledged that the dual mandate on price stability and maximum employment are roughly balanced while noting that the economic outlook is uncertain.

It is worth noting that there was a dissenter in the vote as Governor Michelle Bowman voted to lower rates by a quarter of a percentage point.

The Summary of Economic Projections (SEP) shows officials estimate interest rates to end at 4.4% in 2024 and 3.4% in 2025. Meantime, inflation as measured by the Core Personal Consumption Expenditures Price Index (PCE) is foreseen reaching its target in 2026, though it’s projected to end at 2.6% in 2024 and 2.2% in 2025.

Fed officials project that the economy will grow at a 2% pace in 2024 and the Unemployment Rate to edge up to 4.4% by the end of the year.