Lagos — Gold’s prices retreated after hitting a high as caution increases before the Federal Reserve’s interest rate decision.
While the Federal Reserve is anticipated to maintain its interest rates unchanged this week, the market could remain exposed to Jerome Powell’s speech where a hawkish tone could weigh on the market.
Consensus currently points to one potential rate cut this year likely to happen in June. Additionally, market participants are closely monitoring how the Fed will respond to President Trump’s calls for interest rate reductions.
In a parallel development, the European Central Bank is expected to implement a 25 basis point rate cut on Thursday, potentially providing some support for gold prices.
At the same time, support from geopolitical risks could decline as tensions decrease while inflationary risks from US trade policy have moderated to a certain extent, as President Trump has softened his stance on Chinese tariffs.
However, tariff threats toward other countries could continue to constitute risks and the uncertainty could support the demand for gold to a certain extent. In addition, central bank gold demand could continue to support its outlook and could help limit downside risks.
*Inki Cho Financial Markets Strategist Consultant to Exness
