The Federal Reserve maintains a neutral stance, and gold prices attempt to return to above $3,300

With the Federal Reserve sticking to its neutral monetary policy stance despite acknowledging slowing economic growth, the gold market is trying to regain the round-figure mark of $3,300 an ounce.

The Fed left interest rates unchanged, as expected, in a range of 4.25 per cent to 4.50 per cent. The most notable change in the Fed's monetary policy statement was a slight downgrade in its assessment of the economy, noting that growth had slowed in the first half of the year from the "solid pace" of June.

"While fluctuations in net exports continue to weigh on the data, recent indicators point to slower growth in economic activity in the first half of the year," the Fed said in its monetary policy statement.

The initial market reaction to the Fed's statement was some renewed volatility in gold prices.Greek AllianceOn Wednesday (July 30), spot gold closed at $3,274.88, down $51.47, down 1.55% on the day and an intraday low of $3,268.02. In early Asian trading on Thursday, spot gold rallied to around $3,296, with the original $3,300 support within reach.

Although the Federal Reserve maintained its neutral monetary policy stance, disagreement began to emerge within the committee. Fed governors Bowman and Waller both voted in favor of cutting interest rates at the meeting.

But analysts pointed out that the voting split was not surprising, with both committee members having been outspoken about their dovish views.

With no surprises in the Fed's decision,PepperstoneMichael Brown, a senior market analyst, forecasts that the Federal Reserve will be slightly tougher this year than the market currently expects.

Although the Federal Reserve is currently neutral, the market still expects the Federal Reserve to cut interest rates twice this year, starting as early as September.

"My base case remains that the resilient nature of the labour market and continued tariff-induced price pressures will keep the Fed on the sidelines for the time being," said Mr. Brown. "My view remains that there will probably be only one 25 basis point cut this year, probably at the December meeting."

Daily chart of spot gold, source: Internet

Beijing time on July 31 at 11:52 spot gold, quoted at $3296.85/ounce