– Fed rate cut prospects and global tensions
London — Gold slid after recording three sessions of gains and hitting a month-high as the market positions for a third consecutive weekly gain. The bullish momentum was supported by recent US economic indicators as traders reacted to inflation and retail sales figures.
Furthermore, comments from Fed Governor Christopher Waller suggested the possibility of three to four rate reductions in 2025 if inflation declines, which could benefit the appeal of gold as a non-interest-bearing asset if they materialize. However, markets continue to price in one rate cut this year.
The outlook for gold is also influenced by key events, including the anticipated beginning of Donald Trump’s presidential term.
The latter could have significant implications for economic policies and international trade, particularly in terms of potential tariffs that may drive inflation and trade tensions, reinforcing gold’s position as a hedge against uncertainty.
Although central bank demand remains a strong support for gold prices, recent geopolitical developments, such as the ceasefire in the Middle East, could reduce the immediate safe-haven demand for the precious metal.
*Inki Cho Financial Markets Strategist Consultant to Exness
