Gold Price News: Gold Rises 0.9% Ahead of US Fed Decision

Gold prices posted moderate gains on Tuesday, recapturing some of Monday’s losses, as the markets braced for the US Fed’s expected interest rate decision on Wednesday.

Prices rose as high as $2,765 an ounce on Tuesday, up from around $2,742 an ounce in late trades on Monday.

US Fed tipped to hold fire on rates

The big-ticket item this week is the US Federal Reserve’s expected interest rate decision on Wednesday, with the markets widely anticipating no change from the current level. However, much of the focus will be on how the central bank responds to recent calls from US President Donald Trump to lower interest rates. Any inflationary policies in the US are likely to curb the Fed’s scope to cut rates further this year – creating a potentially challenging environment for US monetary policy.

Nevertheless, current economic and geopolitical uncertainties continue to offer a supportive factor for gold as a safe haven asset. Friday saw prices rise as high as $2,785 an ounce — within a stone’s throw of their all-time highs of over $2,792 an ounce on October 30^th, 2024.

Technical analysis

On the technical charts, gold prices have been testing oblique minor resistance at $2,756 an ounce in recent days, and the failure to move decisively higher does lend a bearish tone for price direction in the short term. Adding further weight to that outlook, the 10-day Relative Strength Index was pegged at 67 as of Tuesday, which may indicate a slightly overbought market. Gold’s strong run-up in January has also meant the price is well above its 20-day moving average at $2,696 an ounce – a further sign that a downward reversion could be on the cards, absent any fresh bullish drivers.

Upcoming data/events

All eyes will be on the US Fed’s interest rate decision later on Wednesday, as well as any comments from Fed Chairman Jerome Powell. Beyond that, the Bank of Canada is also set to make an interest rate decision on Wednesday, widely tipped to be a 25-basis point cut to 3%. Looking ahead, Thursday will bring Euro Area and US GDP growth figures for Q4, 2024, and an interest rate decision by the ECB, with the market expecting a 25-basis point cut to 2.9%.

Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.

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