(Bloomberg) -- Gold pulled back from a record high after Federal Reserve Chairman Jerome Powell signaled policymakers aren’t in a rush to aggressively lower interest rates following Wednesday’s half percentage point cut by the US central bank.

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Gold, which tends to benefit from lower rates, rose as much as 1.2% to $2,600.16 an ounce before erasing gains after Powell said no one should see this as a “new pace” at his press conference. Projections released after the Fed’s two-day gathering showed a narrow majority — 10 of 19 officials — favored lowering rates by at least an additional half-point over the central bank’s two remaining meetings this year.

The start of the Fed’s rate-cutting cycle means interest rates are coming down and the dollar will start to wane, said GraniteShares Advisors founder Will Rhind, whose investment firm manages a gold-backed exchange-traded fund.

“That’s good for gold,” he said in an interview. “The next kick-up for gold will be if there’s a sense that we’re heading into recession, and the fear factor comes out and people need to start buying gold as a hedge.”

Policymakers indicated in their Wednesday statement that they now see the risks to employment and inflation as “roughly balanced.” The Fed chief also said the economy is “basically fine” and expressed confidence that the job market can avoid the rise in unemployment seen in some past fights against inflation.

Aggressive Move

“The Fed moved aggressively this meeting in response to their dual mandate, but does not indicate the Fed is expecting a recession,” said Jay Hatfield, chief executive officer of Infrastructure Capital Advisors. “We believe gold is likely to grind higher as global interest rates continue to drop. So we would be inclined to add” long positions in gold.

Spot gold was down 0.7% to $2,552.77 an ounce at 4:12 p.m. in New York.

Gold prices have broken out dramatically this year, soaring more than 24% to successive records. While the rally at the start of 2024 was underpinned by emerging market demand — particularly from central banks and Asian consumers and investors — the focus in recent months has shifted squarely to the Fed, and the outlook for the US economy. Non-yielding bullion usually benefits in a low-rate environment, and recessionary worries tend to drive investors to seek safety in gold.