Gold Prices Hold on to Gains Amid Fed Policy Shift
Gold prices strengthened from an overnight rally from the $2,615-$2,614 area and gained some positive traction during the Asian session on Tuesday (7/1), albeit without any follow-through. Expectations that US President-elect Donald Trump’s proposed tariffs and protectionist policies could reignite inflation seemed to benefit the commodity’s status as a hedge against rising prices. Additionally, geopolitical risks emanating from the prolonged Russia-Ukraine war and tensions in the Middle East drove some safe-haven flows towards the precious metal.
However, the Federal Reserve’s (Fed) aggressive signal that it will slow the pace of interest rate cuts in 2025, which kept the US Treasury yields high, acted as a headwind for the non-yielding Gold prices. Additionally, some dip-buying in the US Dollar (USD) helped cap gains for the yellow metal. Traders also seemed reluctant to place any aggressive directional bets ahead of the release of this week’s FOMC meeting minutes and the key US Nonfarm Payrolls (NFP) report on Wednesday and Friday.
Source: FXStreet