Gold Price News: Gold Hits Two-Week High Ahead of US Fed decision

Gold prices rallied for a second straight day on Tuesday, rising to a two-week high as the market continued to take support from uncertainty over US trade policies and ahead of an expected interest rate decision by the US Fed on Wednesday.

Prices rose as high as $3,400 an ounce on Tuesday – their highest since April 22^nd – compared with around $3,333 an ounce in late trades on Monday.

All eyes on US Fed for clues on interest rates outlook

The markets were watching closely ahead of the US Fed’s expected interest rate decision on Wednesday, with traders widely expecting no change to rates at this stage. However, eyes will be on speeches by US Fed officials for any clues on the path forward for rates in the coming months.

Data from interest rate traders suggest a 68% probability of no change to rates at the Fed’s next meeting on June 18, while expectations are split for the central bank’s following meeting on July 30, with figures showing an expected 76% chance of a rate cut of at least 25 basis points.

Lower interest rates tend to support precious metals prices as they reduce the opportunity cost of holding non-yield-bearing assets.

Safe havens continue to draw interest

Meanwhile, gold prices continued to take support from uncertainties over the wider economy amid unpredictable trade policies emanating from the White House. US President Donald Trump on Sunday said he was considering imposing 100% tariffs on non-US movies, and this was followed on Monday by announced plans to impose tariffs on imports of pharmaceutical products in the next two weeks.

The prospect of further US trade tariffs suggests the risks of a deeper trade war are still present – an outcome that could curb global economic growth. This naturally pushes traders to divert capital to relative sanctuaries such as gold.

Adding further fuel to this mix, India’s government on Tuesday said it had launched an attack on nine sites in Pakistan – a move that follows an attack on tourists by militants in the disputed Kashmir region in April.

Upcoming data/events

As previously mentioned, the markets will be watching out for Wednesday’s interest rate decision and subsequent comments from the US Fed, for clues on interest rate changes in the coming months. Beyond that, attention will turn to the UK on Thursday, with the Bank of England expected to cut rates by 25 basis points to 4.25%. This will be followed by the US weekly initial jobless claims figures and preliminary non-farm productivity figures for Q1 for an update on the US economy.