Middle East tension and trade uncertainty boosts bullion’s appeal, while traders await Federal Reserve’s decision
19 March 2025 - 07:35
byAnjana Anil
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Mounting geopolitical tension and tariff threats continue to drive safe-haven demand for gold. Picture: 123RF
Bengaluru — Gold rose to hit a record high on Wednesday, as Middle East tension and trade uncertainty lifted the bullion’s appeal, while traders awaited the Federal Reserve’s decision later in the day.
Spot gold held its ground at $3,035.12/oz by 4.15am GMT, after hitting a record peak of $3,038.90 earlier in the session.
US gold futures firmed 0.1% to $3,042.20.
“Traders are viewing gold as an asset which is well equipped to handle tariff-related economic uncertainty,” KCM Trade chief market analyst Tim Waterer said, adding that the current trading environment, where there was instability, was playing to gold’s strengths as an uncertainty hedge.
Investors are worried about an economic slowdown and elevated risks of recession due to US President Donald Trump’s tariffs, which are widely considered likely to stoke inflation.
The tariffs have flared up trade tensions and include a flat 25% levy on steel and aluminium, which came into effect in February, and reciprocal and sectoral tariffs to be imposed on April 2.
The Fed, which will conclude its two-day policy meeting later in the day, is expected to hold its benchmark interest rate steady in the 4.25%-4.50% range.
Non-yielding gold, a hedge against geopolitical and economic uncertainties, thrives in a low interest rate environment.
“If the FOMC [Federal open market committee] meeting takes on a dovish tone in response to growing uncertainty over how tariffs may impact growth, this could ... further assist the gold price ... could be a greenlight for gold to make a push above $3,050,” Waterer said.
Markets also await Fed chair Powell’s speech at 6.30pm GMT to pick up further clues on policy outlook.
Elsewhere, Israeli air strikes pounded Gaza and killed more than 400 people on Tuesday, Palestinian health authorities said, shattering nearly two months of relative calm since a ceasefire began, as Israel warned the onslaught was “just the beginning.”
Spot silver fell 0.2% to $33.97/oz, platinum lost 0.4% to $992.85 and palladium eased 0.1% to $966.24.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold at record high ahead of Fed decision
Middle East tension and trade uncertainty boosts bullion’s appeal, while traders await Federal Reserve’s decision
Bengaluru — Gold rose to hit a record high on Wednesday, as Middle East tension and trade uncertainty lifted the bullion’s appeal, while traders awaited the Federal Reserve’s decision later in the day.
Spot gold held its ground at $3,035.12/oz by 4.15am GMT, after hitting a record peak of $3,038.90 earlier in the session.
US gold futures firmed 0.1% to $3,042.20.
“Traders are viewing gold as an asset which is well equipped to handle tariff-related economic uncertainty,” KCM Trade chief market analyst Tim Waterer said, adding that the current trading environment, where there was instability, was playing to gold’s strengths as an uncertainty hedge.
Investors are worried about an economic slowdown and elevated risks of recession due to US President Donald Trump’s tariffs, which are widely considered likely to stoke inflation.
The tariffs have flared up trade tensions and include a flat 25% levy on steel and aluminium, which came into effect in February, and reciprocal and sectoral tariffs to be imposed on April 2.
The Fed, which will conclude its two-day policy meeting later in the day, is expected to hold its benchmark interest rate steady in the 4.25%-4.50% range.
Non-yielding gold, a hedge against geopolitical and economic uncertainties, thrives in a low interest rate environment.
“If the FOMC [Federal open market committee] meeting takes on a dovish tone in response to growing uncertainty over how tariffs may impact growth, this could ... further assist the gold price ... could be a greenlight for gold to make a push above $3,050,” Waterer said.
Markets also await Fed chair Powell’s speech at 6.30pm GMT to pick up further clues on policy outlook.
Elsewhere, Israeli air strikes pounded Gaza and killed more than 400 people on Tuesday, Palestinian health authorities said, shattering nearly two months of relative calm since a ceasefire began, as Israel warned the onslaught was “just the beginning.”
Spot silver fell 0.2% to $33.97/oz, platinum lost 0.4% to $992.85 and palladium eased 0.1% to $966.24.
Reuters
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