(Bloomberg) -- Federal Bank of Dallas President Robert Kaplan introduced some caution to investor enthusiasm that has sent gold holdings in exchange-traded funds to their longest steak of gains in a decade.

Kaplan said that the reduction in borrowing costs by the Fed shouldn’t be a “full-fledged cutting cycle,” tamping down expectations of a prolonged monetary easing that helped drive non-interest bearing gold to a six-year high last month.

“This cutting we’re doing should be limited, restrained and modest,” Kaplan said in a Bloomberg Television interview Thursday. “I think we’re in a fragile period in here, which is why I am glad the Fed has taken some action in July and September. But I think this could go either way.”

Gold futures for December delivery slipped 0.3% to $1,507.60 an ounce at 9:24 a.m. on the Comex in New York, erasing a 0.6% gain earlier.

Worldwide holdings in bullion-backed exchange-traded funds have expanded for 18 days in a row, the longest run of inflows since 2009.

Kaplan’s comments “put markets in doubt that we’re not necessarily cutting,” Bart Melek, head of global commodities strategies at TD Securities in Toronto, said by phone. “It implied there’s not real need to get aggressive.”

Story Link: Gold Falls as Fed’s Kaplan Says Rate Cuts Should Be Restrained

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To contact the editors responsible for this story: Luzi Ann Javier at ljavier@bloomberg.net, Joe Richter

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