- The Fed keeps rates at 4.25%–4.50%, citing economic uncertainty and balanced risks for mandates.
- Powell adopts a neutral tone, says that Fed can act “quickly” if necessary, but warns that tariffs hinder the policy objectives.
- Despite the setback, gold is still supported by global geopolitical risks and purchases of central banks.
Gold prices retreated more than 2% on Wednesday, after the Federal Reserve (FED) maintained unchanged fees, and despite an improvement in appetite for risk after the start of tariff conversations between the United States (USA) and China. At the time of writing, the Xau/USD is traded at $ 3,371 after reaching a daily peak of $ 3,438.
On Wednesday, the Federal Reserve maintained stable interest rates at 4.25% –4.50% per third consecutive meeting in 2025, citing a growing uncertainty about economic perspectives and high risks both for the maximum employment and for price stability.
The president of the Fed, Jerome Powell, maintained a neutral tone, stating that the current policy position is appropriate and that the Fed is not in a hurry to adjust the rates. He emphasized the provision of the Central Bank to act “quickly as appropriate” if the conditions change, but warned that the objectives of the Fed cannot be achieved completely if the tariffs remain in force.
Powell added that if any of the sides of the dual mandate deviates too much from the course, the Fed would evaluate what policy tools to use to reject. when asked what mandate – inflation or employment – it requires more attention, he replied that it is too early to say it.
On Tuesday, the news that the US Secretary of the US Treasury, Scott Besent, and the Vice Prime Minister of China, He Lifeng, will meet in Switzerland calmed the fears of investors on the “Commercial War.” Therefore, the US dollar regained land as the operators took profits and bought the US dollar against their peers.
Despite this, the prices of the ingot are ready to continue increasing in the midst of the geopolitical conflicts in progress between Russia/Ukraine, Israel/Hamas and India/Pakistan.
Central banks continued to add gold to their reserves
The World Gold Council revealed that the Central Banks of China, Poland and the Czech Republic increased their bullion reserves in April.
Daily summary of market movements: gold recovery stops while central banks continue to add bullion to their reserves
- The recovery of the US dollar is a wind against the bullion prices. The US dollar index (DXY), which tracks the value of the dollar against a basket of six currencies, rises 0.13% to 99.52.
- The stable yields of the US Treasury bonds have limited the recovery of the price of gold. The 10 -year Treasury bonus yield performance is still firm at 4,291%. Meanwhile, the real US returns remain plans in 2,029%, as indicated by the yields of the protected values against the US Treasury inflation to 10 years.
- The World Council of Gold Council (WGC) revealed that the Popular Bank of China (PBOC) added 2 tons to its gold reserves in April, for sixth consecutive month. Krishan Gopaul, EMEA senior analyst at the WGC, added: “Net purchases to date now total 15 tons, helping to raise gold reserves to 2,294 tons.”
- The National Bank of Poland (NBP) increased 12 tons in April to 509 tons, while the Czech National Bank increased its reserves by 2.5 tons in April.
- Swaps markets have so far valued the first rate of 25 basic points (PBS) of the Fed for the July meeting, and expect two additional reductions towards the end of the year.
Technical Perspective of Xau/USD: Price of gold trapped within the range of $ 3,350- $ 3,400
The price of gold It goes below $ 3,400, but is still upward. However, buyers must recover this level to be able to maintain the $ 3,450 mark. If these levels are exceeded, the bulls could prove the historical maximum (ATH) of the $ 3,500 ingot.
On the other hand, if gold prices fall below $ 3,350, they could pave the way to test the minimum of the May 1, $ 3,202 cycle. A fall below this level could challenge sellers to try the simple mobile average (SMA) of 50 days at $ 3,113.
Oro FAQs
Gold has played a fundamental role in the history of mankind, since it has been widely used as a deposit of value and a half of exchange. At present, apart from its brightness and use for jewelry, precious metal is considered an active refuge, which means that it is considered a good investment in turbulent times. Gold is also considered a coverage against inflation and depreciation of currencies, since it does not depend on any specific issuer or government.
Central banks are the greatest gold holders. In their objective of supporting their currencies in turbulent times, central banks tend to diversify their reserves and buy gold to improve the perception of strength of the economy and currency. High gold reserves can be a source of trust for the solvency of a country. Central banks added 1,136 tons of gold worth 70,000 million to their reservations in 2022, according to data from the World Gold Council. It is the largest annual purchase since there are records. The central banks of emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has a reverse correlation with the US dollar and US Treasury bonds, which are the main reserve and shelter assets. When the dollar depreciates, the price of gold tends to rise, which allows investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rebound in the stock market tends to weaken the price of gold, while mass sales in higher risk markets tend to favor precious metal.
The price of gold can move due to a wide range of factors. Geopolitical instability or fear of a deep recession can cause the price of gold to rise rapidly due to its condition of active refuge. As an asset without yield, the price of gold tends to rise when interest rates lower, while the money increases to the yellow metal. Even so, most movements depend on how the US dollar (USD) behaves, since the asset is quoted in dollars (Xau/USD). A strong dollar tends to keep the price of gold controlled, while a weakest dollar probably thrusts gold prices.
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