Fed Sends Gold Down, But Now It’s Starting to Reversal!
Gold edged up following a decline in the previous session that was fueled by Federal Reserve Chairman Jerome Powell’s warning about inflation risks to the U.S. economy.
Bullion was trading around $3,380 an ounce in early Asia, after falling 0.6% on Wednesday. While the Fed left interest rates unchanged and policymakers still expect two cuts by the end of the year, Powell said the central bank’s market committee continues to expect tariffs to affect final prices.
Fed policymakers also released new economic forecasts the first since President Donald Trump announced a series of sweeping tariffs in April — showing they expect weaker growth, higher inflation and lower employment this year. A significant rise in consumer prices could limit monetary easing, which would be negative for gold since it does not pay interest.
Gold has also found support from ongoing tensions in the Middle East. Trump said Iran had squandered an opportunity to make a deal over its nuclear capabilities, but made no commitment on whether the U.S. would join an Israeli strike. Rising geopolitical tensions and economic uncertainty have combined with robust central bank buying and inflows into exchange-traded funds, pushing the precious metal nearly 30% higher this year.
Spot gold rose 0.3% to $3,378.59 an ounce as of 8:21 a.m. in Singapore. The Bloomberg Dollar Spot Index was little changed. Silver was flat, while platinum and palladium rose.
Source: Bloomberg
