Gold Steady as Fed Holds Rates, Market Eyes Economic Signals
Gold prices remained flat in early Asian trading hours on Thursday after the U.S. Federal Reserve decided to keep interest rates steady, offering little clarity on the future monetary policy path.
- Market Overview
Spot gold was little changed at $2,761.79 per ounce as of 0049 GMT.
U.S. gold futures added 0.2% to $2,774.50 per ounce.
- Federal Reserve Policy & Impact on Gold
The U.S. central bank maintained interest rates on Wednesday, with Fed Chair Jerome Powell stating that further progress on inflation or signs of labor market weakness would be necessary before considering rate cuts. Higher interest rates typically reduce the appeal of non-yielding bullion.
The Fed’s decision was widely expected following its rate adjustments earlier in 2024, which saw the benchmark rate reduced by a full percentage point.
- Tariff Concerns & Inflationary Risks
Investors are also assessing U.S. President Donald Trump’s latest tariff threats. The White House confirmed that Trump still plans to impose steep tariffs on Mexico and Canada by Saturday and is "very much" considering additional tariffs on China over the weekend.
These policies, seen as potentially inflationary, could push the Fed to maintain higher interest rates for a longer period, dampening gold’s appeal as an inflation hedge.
- Global Market Developments
European Central Bank (ECB): The ECB is widely expected to announce an interest rate cut later today.
London Bullion Market: Traders are racing to borrow gold from central banks, driven by increased gold deliveries to the U.S. amid speculation about potential import tariffs.
- Other Precious Metals
Silver: Up 0.2% to $30.85 per ounce.
Platinum: Gained 0.7% to $952.49 per ounce.
Palladium: Increased 0.5% to $967.38 per ounce.
- Upcoming Economic Data (GMT)
0630 – France Q4 GDP Preliminary
0900 – Germany Q4 GDP Flash Estimate
1000 – EU GDP Flash Prelim & Unemployment Rate (Dec)
1315 – ECB Refinancing Rate Decision
1330 – U.S. Q4 GDP Advance Estimate, Initial Jobless Claims (Jan 25)
1530 – U.S. EIA Natural Gas Storage Data (Jan 24)