Gold slips more than 1%; Fed verdict on tap
Gold prices fell more than 1% on Wednesday, pressured by a firmer dollar and U.S.-China trade talks optimism, while the focus is on Federal Reserve’s policy decision due later in the day.
Spot gold slipped 1% to $3,395.29 an ounce. U.S. gold futures lost about 0.6% to $3,403.50.
The U.S. dollar gained 0.2% against other fiat currencies. A stronger dollar makes gold more expensive for other currency holders.
“China and the United States are formally trying to start a conversation on tariffs, igniting optimism in risk markets,” said Bart Melek, head of commodity strategies at TD Securities.
U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China’s economic tsar He Lifeng in Switzerland this weekend for talks that could be the first step toward resolving a trade war disrupting the global economy.
Gold, considered a hedge against geopolitical risks, has risen 29.4% so far this year.
Bank of America said, “while we see limited upside (for gold) near term, we expect prices to push higher again in second half of 2025, potentially hitting $4,000.”
China’s central bank added gold to its reserves in April for the sixth straight month, official data showed.
Meanwhile, the Fed’s policy decision is due at 1400 ET (1800 GMT) today, followed by Chair Jerome Powell’s speech. The market will watch out for cues on policy outlook.
“If the Fed surprises and is a lot more hawkish than the market expects, we think there is strong support above $3,100,” Melek added.
The Fed in the past had indicated that it was in no hurry to cut rates and market consensus is that there will be no cuts before July.
Higher interest rates tend to pressure bullion as it yields no interest.
Elsewhere, spot silver shed 1.4% to $32.81 an ounce, platinum dropped 0.1% to $986.15 and palladium edged 0.7% higher to $981.03.
Source: Reuters
