Gold prices held steady near record highs on Wednesday as traders evaluated the latest U.S. inflation data and comments from Federal Reserve Chair Jerome Powell. The precious metal remained largely unchanged, maintaining a strong position despite economic uncertainties.
U.S. inflation showed broad gains at the start of the year, further diminishing expectations for multiple interest rate cuts by the Federal Reserve in 2025. At the same time, President Donald Trump’s administration continued to advance its trade agenda, including proposed tariffs on steel and aluminum imports.
During his testimony before the House Financial Services Committee, Powell reiterated that the Fed would approach future rate decisions cautiously. He acknowledged the inflation data, stating, “We’re close but not there on inflation,” signaling that while progress had been made, further steps were needed before easing monetary policy. Powell had previously emphasized the Fed’s patience regarding interest rate cuts.
The Federal Reserve had opted to keep rates unchanged at its first meeting of the year, awaiting further signs of progress in moderating inflation. Meanwhile, the gold market has surged this year, reaching new heights and positioning itself for a potential test of $3,000 an ounce. This upward movement is largely attributed to increased demand for safe-haven assets, driven by concerns over trade tensions and economic uncertainty.
As traders try to gauge the potential economic effects of the administration’s trade and immigration policies, Powell cautioned against speculating on the impact of tariffs, calling such forecasts unwise. The Fed chair’s remarks suggest a cautious approach in navigating potential inflationary pressures that could arise from ongoing trade policies.
Gold’s recent rally has been mirrored by rising investments in bullion-backed exchange-traded funds (ETFs), with global holdings climbing 1.2% this year, the highest since November, according to Bloomberg data.
At 11:57 a.m. in New York, spot gold, which briefly surpassed $2,942 per ounce on Tuesday, rose 0.2% to $2,902.78. The Bloomberg Dollar Spot Index added 0.1%, while silver remained stable. Platinum prices increased, and palladium saw a decline.
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