Gold at record high after Fed signals two rate cuts in 2025
Federal Reserve’s hint at more rate cuts this year bolsters the metal’s appeal
20 March 2025 - 07:59
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 a record high on Thursday as the US Federal Reserve hinted at two possible interest rate cuts this year, bolstering bullion’s appeal amid ongoing geopolitical and economic tensions.
Spot gold was little changed at $3,048.37/oz by 3.50am GMT, after hitting a record high of $3,055.96 earlier in the session.
US gold futures gained 0.5% to $3,056.50.
Gold was driven by “a lot of uncertain market situations, geopolitical tensions, weaker US dollar, and expectations that interest rates will be cut later”, said Dick Poon, general manager at Heraeus Metals Hong Kong Ltd.
The Fed held its benchmark overnight rate steady in the 4.25%-4.50% range on Wednesday. Policymakers expect the central bank to deliver two quarter-percentage-point rate cuts by the end of 2025.
Non-yielding gold thrives in a low-interest rate environment.
US President Donald Trump’s initial policies, including extensive import tariffs, appeared to have tilted the US economy towards slower growth and at least temporarily higher inflation, Fed Chair Jerome Powell said.
Trump’s tariffs, which have inflamed trade tensions, are widely thought to be inflationary and detrimental to economic growth.
The tariff uncertainty, rate cut possibilities, and resumption of tension in the Middle East have contributed to gold’s rally, prompting bullion to notch 16 record highs so far in 2025, four of them above the $3,000 milestone.
The Israeli military resumed ground operations in central and southern Gaza as air strikes killed at least 48 Palestinians, local health workers said.
“For now, gold’s appeal as a safe haven and inflation hedge has further strengthened in light of those geopolitical concerns and tariff uncertainty. We remain constructive on the outlook of gold,” said OCBC FX strategist Christopher Wong.
“Given the very good performance in gold through quarter one, I think a correction is not out of the question,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.
“However, so far corrections have been relatively short-lived and well bid ... $3,090-$3,100 may see some resistance.”
Spot silver was flat at $33.79/oz, platinum inched up 0.1% to $994.40, and palladium was unchanged at $958.81.
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 after Fed signals two rate cuts in 2025
Federal Reserve’s hint at more rate cuts this year bolsters the metal’s appeal
Bengaluru — Gold rose to a record high on Thursday as the US Federal Reserve hinted at two possible interest rate cuts this year, bolstering bullion’s appeal amid ongoing geopolitical and economic tensions.
Spot gold was little changed at $3,048.37/oz by 3.50am GMT, after hitting a record high of $3,055.96 earlier in the session.
US gold futures gained 0.5% to $3,056.50.
Gold was driven by “a lot of uncertain market situations, geopolitical tensions, weaker US dollar, and expectations that interest rates will be cut later”, said Dick Poon, general manager at Heraeus Metals Hong Kong Ltd.
The Fed held its benchmark overnight rate steady in the 4.25%-4.50% range on Wednesday. Policymakers expect the central bank to deliver two quarter-percentage-point rate cuts by the end of 2025.
Non-yielding gold thrives in a low-interest rate environment.
US President Donald Trump’s initial policies, including extensive import tariffs, appeared to have tilted the US economy towards slower growth and at least temporarily higher inflation, Fed Chair Jerome Powell said.
Trump’s tariffs, which have inflamed trade tensions, are widely thought to be inflationary and detrimental to economic growth.
The tariff uncertainty, rate cut possibilities, and resumption of tension in the Middle East have contributed to gold’s rally, prompting bullion to notch 16 record highs so far in 2025, four of them above the $3,000 milestone.
The Israeli military resumed ground operations in central and southern Gaza as air strikes killed at least 48 Palestinians, local health workers said.
“For now, gold’s appeal as a safe haven and inflation hedge has further strengthened in light of those geopolitical concerns and tariff uncertainty. We remain constructive on the outlook of gold,” said OCBC FX strategist Christopher Wong.
“Given the very good performance in gold through quarter one, I think a correction is not out of the question,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.
“However, so far corrections have been relatively short-lived and well bid ... $3,090-$3,100 may see some resistance.”
Spot silver was flat at $33.79/oz, platinum inched up 0.1% to $994.40, and palladium was unchanged at $958.81.
Reuters
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