Gold prices largely held steady on Wednesday as investors awaited the Federal Reserve’s decision on interest rates. Market focus was also on U.S. President Donald Trump’s trade policies following new tariff threats.
In the UAE, gold rates regained some of this week’s losses, with 24-carat gold rising by AED2.25 to AED334.5 and 22-carat gold increasing by AED2 to AED309.75. Meanwhile, 21-carat gold and 18-carat gold gained AED1.75 to AED299.75 and AED257, respectively.
Globally, spot gold rose a marginal 0.02 percent to $2,760.78 per ounce, as of 6:08 GMT. Meanwhile, U.S. gold futures held steady at $2,794.55.
The U.S. dollar index fell 0.08 percent to 107.78, making bullion more attractive for other currency holders.
Market recovery limits gold’s upside
Last week, gold prices were trading near their record high but fell over 1 percent on Monday as investors rushed to liquidate bullion to offset losses triggered by a sharp pullback in tech stocks. This plummet in tech stocks was spurred by DeepSeek’s latest low-cost, low-power AI model.
The recovery in global markets following Monday’s fall impacted demand for safe-haven assets and failed to assist gold prices in rising over their Tuesday levels ahead of the U.S. central bank’s rate cut verdict.
Fed to keep rates steady today
The Fed’s first policy meeting of the year will conclude later in the day. The U.S. central bank is widely expected to keep rates steady after 100 basis points of easing from September to December last year. Gold traditionally acts as a safe-haven asset during times of economic uncertainty and trade wars. However, higher interest rates could impact its appeal since it is non-yielding.
Since the Fed’s December meeting, data has maintained the core view among Fed officials that inflation will continue to move steadily towards the 2 percent target, with a low unemployment rate and continued hiring and economic growth. If central bank officials signal additional rate cuts for the year, treasury yields may decline and gold prices will likely receive additional support.
The market is pricing in the possibility that the U.S. central bank will lower borrowing costs twice by the end of this year amid signs of inflationary pressures following Trump’s inauguration.
Trump’s tariff policies raise trade war concerns
Investors remain concerned about the potential economic fallout from Trump’s plans to impose tariffs on imported computer chips, pharmaceuticals, aluminum, steel and copper. The move, aimed at pushing the companies to boost production in the U.S., could trigger a fresh wave of global trade wars and might continue to act as a tailwind for gold prices.
Trump still plans to issue tariffs on Canada and Mexico on Saturday, a White House spokesperson told reporters on Tuesday. Investors will also keenly await policymakers’ reactions to Trump’s demand to lower interest rates. However, Trump’s policies are seen as inflationary, which could lead the Fed to keep interest rates higher for longer.
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.
Elsewhere, top gold consumer China’s markets remain closed for the Lunar New Year holidays.
Other precious metals
As gold prices held steady, the precious metals market saw mixed movement on Wednesday. Spot silver gained 0.04 percent to $30.40 per ounce, while platinum dipped 0.07 percent to $940.95 and palladium lost 0.48 percent to $950.44.
