Gold prices were steady on Wednesday as investors awaited comments from Federal Reserve Chairman Jerome Powell to assess the impact of the war in Iran on the economy, amid stalled political negotiations.
Markets are awaiting the Federal Reserve amid inflationary pressures.
Investors expect the Federal Reserve to keep interest rates unchanged at the conclusion of its two-day meeting, especially given the return of inflationary pressures due to rising energy prices linked to the war.
This environment points to a complex equation, where inflation remains high while easing decisions become increasingly difficult, leaving markets on tenterhooks for Powell’s messages on the future path.
Ilya Spivak, head of global macroeconomics at Tasty Life, said that much of the resilience of the markets since the tariff panic last April has been based on the assumption that the Federal Reserve is prepared to intervene if conditions deteriorate, adding that if the bank indicates that intervention requires strict conditions, gold could continue its decline.
Geopolitical tensions support oil and put pressure on gold.
Efforts to end the conflict with Iran remain stalled, with US President Donald Trump expressing dissatisfaction with Tehran’s latest proposal, amid reports of internal turmoil over leadership.
In contrast, oil prices remained high, with Brent crude settling above $111 a barrel, supported by reports of the United States' intention to extend the embargo on Iranian ports.
This rise in energy prices contributes to increased inflationary pressures, which strengthens the likelihood of interest rates remaining high for a longer period, thus limiting the appeal of gold as a non-yielding asset.
Gold: Between Central Bank Support and Liquidity Risks
Investors are also watching the decisions of a number of global central banks during the week, including the European Central Bank, the Bank of England and the Bank of Canada, as these have a direct impact on global liquidity trends.
In this context, some positive expectations remain, with Goldman Sachs predicting that gold prices could reach $5,400 by the end of the year, supported by the continued trend of central banks diversifying their reserves.
However, the bank warns that gold may remain vulnerable to further sell-offs if the Strait of Hormuz disruptions continue or a correction occurs in the bond and stock markets, which could put pressure on prices in the short term.
Gold at settlement yesterday
Gold prices declined at the close of trading on Tuesday, pressured by a stronger dollar and rising oil prices amid continued geopolitical uncertainty and anticipation of the outcome of the Federal Reserve meeting that began today and ends tomorrow.
Gold futures for June delivery fell 1.82%, or $85.30, to $4,608.40 an ounce.
Gold now
Gold in spot trading fell slightly by 0.1% to $4,590.80 an ounce, after hitting its lowest level since April 2 in the previous session, indicating continued short-term pressure on the metal.
Gold futures in the United States for June delivery also fell by 0.1% to $4,604, reflecting the cautious mood prevailing in the markets ahead of monetary policy signals.
The movements of other metals reflect divergent trends.
As for other metals, silver prices rose 0.8% to $73.63 an ounce, while platinum fell 0.3% to $1,934.40.
Palladium also fell by 0.3% to $1,455.57, reflecting the mixed performance of industrial and precious metals under current economic conditions.
