Gold Rally Fades

 

Gold Slips as Fed Optimism Fades and Stronger US Dollar Weighs on Prices

Gold prices retreated on Thursday as investors reassessed the Federal Reserve's inflation outlook following the central bank's decision to keep interest rates unchanged. A stronger US dollar and a rebound in US Treasury yields also pressured the precious metal, limiting its recent gains.

As of 11:44 WIB, XAU/USD fell 0.4% to $4,049.99 per ounce, after earlier climbing to a one-week high of $4,100.42 in the aftermath of the Fed's policy announcement. Meanwhile, Gold Futures edged up 0.3% to $4,047.20, silver (XAG/USD) declined 0.6% to $57.32, and platinum (XPT/USD) dropped 1.3% to $1,597.87.

Gold Rally Loses Momentum After Fed Holds Rates Steady

Gold initially rallied after the Federal Reserve left interest rates unchanged, as declining US Treasury yields and a weaker US Dollar Index boosted demand for the non-yielding precious metal.

However, the rally quickly lost steam after investors digested comments from Fed Chair Kevin Warsh, who reiterated the central bank's commitment to bringing inflation back to its long-term 2% target despite maintaining its current monetary policy stance.

The US Dollar Index (DXY) was last trading near 100.9, while benchmark Treasury yields recovered from their post-decision lows, reducing the upside potential for gold.

According to the CME FedWatch Tool, markets are now pricing in approximately a 64% probability of a September interest rate hike, down from around 81% before the Fed's policy announcement, reflecting a notable shift in market expectations.

Middle East Tensions Keep Inflation Risks Elevated

Geopolitical tensions also remained in focus after the United States launched fresh strikes against Iran overnight. US Central Command described the operation as a "strong response" to what it called an attempted Iranian attack on American forces the previous day.

Earlier, President Donald Trump vowed to retaliate against Tehran, stating that the United States would respond decisively after the military intercepted what he described as a surprise Iranian attack targeting US troops.

The renewed escalation has kept oil prices elevated as traders assess the risk of further disruptions to global energy supplies. Shipping concerns have also intensified after the Iran-backed Houthi group warned it would target Saudi vessels attempting to reach the Indian Ocean, prompting several oil tankers to seek alternative routes.

Persistent strength in energy markets has reinforced concerns that inflation could remain elevated for longer, complicating the Federal Reserve's path toward future monetary policy easing.

US PCE Inflation Data in Focus

Investors are now awaiting the release of the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge, for fresh clues on inflation trends and the future direction of interest rates.

Market attention will also shift to upcoming monetary policy decisions from the Bank of England (BoE) and the Bank of Japan (BoJ) later this week, with both central banks widely expected to leave their benchmark interest rates unchanged.

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Gold Futures Rise

 

Gold Futures Edge Higher During Asian Trading Session as US Dollar Weakens

Gold futures traded higher during the Asian session on Wednesday, supported by a softer US dollar and steady demand for safe-haven assets.

On the COMEX division of the New York Mercantile Exchange (NYMEX), August Gold Futures were trading at $4,029.00 per troy ounce at the time of writing, marking a 0.24% gain for the day.

Earlier in the session, gold futures climbed to an intraday high, highlighting continued bullish sentiment among investors. Technically, the precious metal is expected to find immediate support at $4,009.80, while the next key resistance level stands at $4,144.00.

Meanwhile, the US Dollar Index (DXY) Futures, which measures the performance of the US dollar against a basket of six major currencies, declined 0.16% to 101.11. A weaker dollar typically makes gold more attractive to holders of other currencies, helping to support bullion prices.

Elsewhere in the metals market, September Silver Futures advanced 0.72% to $57.94 per troy ounce, reflecting stronger buying interest in precious metals. In contrast, September Copper Futures slipped 0.29% to $6.32 per pound, as traders remained cautious over the outlook for industrial demand.

Investors are now closely monitoring upcoming economic data and central bank developments, which could influence both the US dollar and precious metals markets in the coming trading sessions.

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Gold Awaits Fed

 

Gold prices edged lower on Tuesday as the US dollar hovered near a one-month high, while investors remained cautious ahead of the Federal Reserve’s policy announcement and comments from Fed Chair Kevin Warsh for fresh clues on the future path of interest rates.

Spot gold fell 0.7% to $4,048.40 per ounce as of 10:07 WIB, while US Gold Futures declined by a similar margin to $4,049.10 per ounce. Despite the pullback, the precious metal had posted modest gains over the previous two trading sessions.

The stronger US dollar continued to weigh on bullion prices, making gold more expensive for overseas buyers. The US Dollar Index remained close to its highest level in nearly a month as traders adopted a wait-and-see approach ahead of the Fed’s highly anticipated policy decision.

Markets overwhelmingly expect the Federal Reserve to leave interest rates unchanged at the conclusion of its two-day meeting on Wednesday. However, investors have increased bets that policymakers could resume monetary tightening later this year. According to the CME FedWatch Tool, markets are pricing in roughly a 40% chance of a rate hike this week and an 80% probability of another increase in September.

Higher interest rates typically reduce the appeal of non-yielding assets such as gold by increasing the opportunity cost of holding bullion.

Investor sentiment also remained cautious ahead of several key US economic releases scheduled later this week, including second-quarter Gross Domestic Product (GDP) data and the Fed’s preferred inflation gauge. These reports are expected to play a crucial role in shaping expectations for future monetary policy.

Market analysts noted that gold continues to trade within a broad range as investors await clearer guidance from the central bank. Until then, price movements are likely to remain driven by economic data, interest rate expectations, and fluctuations in the US dollar.

On the geopolitical front, market concerns eased after US President Donald Trump said Washington was engaged in “good talks” with Iran, raising hopes for a diplomatic agreement while warning that military action could resume if negotiations fail.

The temporary pause in hostilities between the United States and Iran has eased fears of supply disruptions and reduced inflation concerns linked to geopolitical tensions. Adding to the softer inflation outlook, oil prices extended their sharp decline during Tuesday’s Asian trading session.

Elsewhere in the precious metals market, silver fell 1.8% to $57.387 per ounce, while platinum slipped 0.9% to $1,611.60 per ounce.

Base metals also traded lower. London Metal Exchange benchmark copper futures declined 0.6% to $13,677.33 per metric ton, while US copper futures dropped 0.5% to $6.364 per pound, reflecting cautious sentiment across the broader commodities market ahead of the Fed's policy announcement.

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