Gold Holds Near Record After Fed Signals No Rush to Cut Rates
Gold steadied near a new record after Federal Reserve Jerome Powell acknowledged the high level of uncertainty surrounding President Donald Trump’s policy changes but said the U.S. central bank was in no rush to adjust borrowing costs.
Bullion prices peaked above $3,057 an ounce on Thursday, a day after the Fed kept interest rates unchanged while projecting slower U.S. growth and higher inflation this year. Lower interest rates are typically a drag on the non-yielding precious metal.
Powell said his base case was that any increase in inflation driven by tariffs would be “transitory,” but later added that it would be very hard to say with confidence how much of that inflation would come from tariffs versus other factors. He also said the possibility of a recession had increased, though not significantly. Gold has risen 16% this year in a rally that has taken it to a series of all-time highs, extending last year’s strong advance as investors sought safety. Several major banks have also raised their price targets for bullion in recent weeks, with Macquarie Group predicting it could climb as high as $3,500 an ounce.
Spot gold fell slightly to $3,041.57 an ounce at 9:51 a.m. in London, after rising more than 2% over the previous three sessions. The Bloomberg Dollar Spot Index rose 0.3%. Silver, platinum and palladium all fell slightly.
Despite the upgrade in inflation forecasts, the bond market took advantage of the fact that U.S. growth estimates were cut — validating some concerns that Trump’s trade war and spending cuts would cool the economy. Fed officials continue to forecast a half-percentage point interest rate cut this year.
In China, meanwhile, the tone has been increasingly cautious. The state-run China Securities Journal warned that investors should be cautious with gold as prices are likely to be volatile in the future.
Source: Bloomberg
