Gold prices rose marginally on Thursday after the U.S. Federal Reserve held interest rates steady. Investor focus is now on U.S. President Donald Trump’s tariff plans and a key inflation report which will likely provide additional insight into the trajectory of interest rates.
In the UAE, gold rates were largely unchanged, with 24-carat gold and 22-carat gold rising by AED0.25 to AED334.25 and AED309.50, respectively. Meanwhile, 21-carat gold and 18-carat gold held steady at AED299.50 and AED256.75, respectively.
Globally, spot gold rose 0.31 percent to $2,761.56 per ounce, as of 6:11 GMT. Meanwhile, U.S. gold futures rose 0.16 percent to $2,797.92.
The U.S. dollar index fell 0.12 percent to 107.87, making bullion more attractive for other currency holders.
Fed holds interest rates
The Federal Reserve held interest rates steady on Wednesday and signaled no rush in lowering borrowing costs until inflation and jobs data made it appropriate to begin another easing cycle. In the post-meeting press conference, Fed Chair Jerome Powell said that politics would not affect the central bank’s monetary policy calls and downplayed expectations for future rate cuts.
Powell’s remarks reaffirmed market expectations that rates will remain higher for longer amid caution over Trump’s protectionist policies, which could reignite inflation. The yield on the benchmark 10-year U.S. government bond remained near its one-month low, limiting gains in the U.S. dollar which supported gold prices at their current levels.
Gold is a hedge against inflation, but higher interest rates impact the appeal of the non-yielding asset.
Market awaits inflation data
Investors are now awaiting the December personal consumption expenditures (PCE) price index report, due on Friday, to assess the future of inflation. The PCE price index is the Fed’s preferred inflation gauge.
Earlier this week, the White House said Trump still plans to hit Mexico and Canada with steep tariffs on Saturday and he is “very much” considering some on China. Trump had previously proposed tariffs of up to 10 percent on global imports, 60 percent on Chinese goods, and a 25 percent import tariff increase on Canadian and Mexican products.
He also vowed to hit the European Union with tariffs and said his administration was discussing a 10 percent tariff on goods imported from China starting February 1.
Read: UAE gold prices rise AED2.25, global rates steady as investors await Fed decision
European Central Bank to cut rates
The European Central Bank will likely keep the door to further policy easing open as concerns over economic growth outweigh worries about persistent inflation. The ECB lowered borrowing costs four times last year and up to four moves are anticipated in 2025. A rate cut by the ECB will likely drive demand for gold, further supporting prices.
Meanwhile, the Bank of Canada (BOC) trimmed its key policy rate by 25 basis points to 3 percent on Wednesday. However, it also cut its growth forecasts and warned Canadians that a tariff war triggered by the United States could cause major economic damage. Wednesday’s cut marked the sixth time in a row that the bank has reduced borrowing costs. Inflation has consistently stayed around the mid-point of the bank’s 1-3 percent target range but economic growth remains sluggish.
Other precious metals
As gold prices rose, the precious metals market saw positive movement on Thursday. Spot silver gained 0.04 percent to $30.83 per ounce, while platinum rose 1.21 percent to $957.80 and palladium increased by 0.47 percent to $967.
