Gold Prices Hover Below Record as Fed Decision Looms
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Gold (XAU/USD -0.01%) remains firmly supported near $2,770 per ounce, with the all-time high of $2,790 from October 2024 within striking distance. As market participants position ahead of the Federal Reserve’s interest rate decision, traders anticipate potential volatility in bullion pricing based on the Fed’s policy stance and commentary from Chairman Jerome Powell.
The Fed is expected to maintain interest rates at 4.25%-4.50%, keeping liquidity conditions favorable for gold. The prospect of steady or lower rates reduces the opportunity cost of holding non-yielding assets like gold, maintaining its appeal as a store of value.
Trump vs. Powell: The Interest Rate Debate
Monetary policy is at a crossroads as President Donald Trump continues to push for aggressive rate cuts, challenging Powell’s more measured approach. The Fed’s independence will be tested in 2025 as inflationary pressures, geopolitical uncertainties, and potential trade conflicts shape its policy path.
Gold has benefited from Trump’s tariff policies and strong-dollar rhetoric, which have stoked inflation concerns and fueled demand for safe-haven assets. If inflation accelerates or the Fed signals prolonged accommodative policy, gold could break above its historical peak in the near term.
Gold’s 2025 Outlook: A Breakout Year?
Investor sentiment suggests gold is poised for a strong performance in 2025, driven by:
Geopolitical Uncertainty – Trade disputes, protectionist policies, and heightened global tensions could reinforce gold’s safe-haven appeal.
Monetary Policy Divergence – While Trump favors deeper rate cuts, the Fed remains cautious, balancing inflation risks with economic growth. A dovish pivot could propel bullion higher.
Supply Constraints & Central Bank Demand – Global central banks, particularly China and Russia, continue to accumulate gold reserves, tightening supply and reinforcing long-term bullish sentiment.
Technically, a sustained move above $2,790 could open the door to $2,820-$2,850, while immediate support rests at $2,740-$2,725. With gold volatility set to rise around key macro events, traders remain watchful for confirmation of a breakout beyond historical highs.
The Fed is expected to maintain interest rates at 4.25%-4.50%, keeping liquidity conditions favorable for gold. The prospect of steady or lower rates reduces the opportunity cost of holding non-yielding assets like gold, maintaining its appeal as a store of value.
Trump vs. Powell: The Interest Rate Debate
Monetary policy is at a crossroads as President Donald Trump continues to push for aggressive rate cuts, challenging Powell’s more measured approach. The Fed’s independence will be tested in 2025 as inflationary pressures, geopolitical uncertainties, and potential trade conflicts shape its policy path.
Gold has benefited from Trump’s tariff policies and strong-dollar rhetoric, which have stoked inflation concerns and fueled demand for safe-haven assets. If inflation accelerates or the Fed signals prolonged accommodative policy, gold could break above its historical peak in the near term.
Gold’s 2025 Outlook: A Breakout Year?
Investor sentiment suggests gold is poised for a strong performance in 2025, driven by:
Geopolitical Uncertainty – Trade disputes, protectionist policies, and heightened global tensions could reinforce gold’s safe-haven appeal.
Monetary Policy Divergence – While Trump favors deeper rate cuts, the Fed remains cautious, balancing inflation risks with economic growth. A dovish pivot could propel bullion higher.
Supply Constraints & Central Bank Demand – Global central banks, particularly China and Russia, continue to accumulate gold reserves, tightening supply and reinforcing long-term bullish sentiment.
Technically, a sustained move above $2,790 could open the door to $2,820-$2,850, while immediate support rests at $2,740-$2,725. With gold volatility set to rise around key macro events, traders remain watchful for confirmation of a breakout beyond historical highs.