Gold, a Safe Haven That’s Quietly Waiting for Its Moment
Federal Reserve Chairman Jerome Powell and his colleagues have voted to keep interest rates steady at 4.25%-4.50%. They are unanimous in their stance on doing nothing for now, but they remain divided on their views on risks. Asked about the division in officials’ rate projections, Powell played it down. Given the high level of uncertainty in the economy, he said, “No one can hold this path of interest rates with much confidence.”
There are many unknowns about the outlook for the economy and interest rates, but Federal Reserve Chairman Jerome Powell has signaled at least one thing that seems certain: Higher prices are coming. Policy makers voted unanimously to keep rates steady for a fourth straight meeting on Wednesday while waiting for clarity on whether rates will leave a one-time or longer-lasting inflation imprint.
So far, the economy has proven resilient, with inflation rising less than expected in recent months and unemployment holding steady. Uncertainty has eased, officials said in post-meeting remarks, but it remains elevated. The Fed chief stressed that policy should be forward-looking, adding that officials are starting to see some impact from tariffs but expect more in the coming months.
The dot-plot still shows two rate cuts by year-end, but the pace of cuts has slowed due to tariff-related inflation concerns and geopolitical tensions. US Treasury yields edged higher on Powell’s hawkish comments; the dollar strengthened modestly. A stronger dollar usually weighs on gold, as it is priced in USD.
Despite the dovish tailwinds from the rate cut plans, cautious rhetoric and inflationary sentiment have kept traders from aggressively adding to long positions.
Weak US economic data (retail sales, housing, industrial output) adds to the likelihood that the Fed will cut rates later this year—but not now.
Citi, Goldman Sachs, and JPMorgan remain optimistic about the medium-term gold outlook. Goldman: target USD3,700/oz by end-2025. JP Morgan: projection USD4,000/oz by Q22026 Citigroup gives a 60% probability that gold will consolidate at USD3,100–3,500 first, then drop to 2,500–2,700 by end-2026.
Global central banks continue to aggressively add to gold reserves: more than 1,000 tonnes of purchases in 2024, indicating strong structural support. These purchases are the backbone of the long-term bullish trend, although volatility remains.
Source : (mrv@Newsmaker)
