- Gold futures remain consolidating as geopolitics and Fed signals clash.
- Eased Middle East tension reduces the safe-haven demand for gold.
- Markets turn their focus on key US data and the Fed’s second day of testimony.
Gold futures remain steady on Wednesday above the key level of $3,310. The precious metal declined on Tuesday to a fresh 2-week low as the risk sentiment improved after the geopolitical tensions eased. However, the markets remain cautious as uncertainty from the US Federal Reserve lingers.
The market opened on Monday with a softer tone after President Trump announced a “complete and total ceasefire” between Iran and Israel. The risk-on shift triggered a pullback in the safe-haven assets, including gold futures. However, the reportedly subsequent missile launches from both sides raised doubts about the durability of the ceasefire. The investors cheered the de-escalation, as no casualties were reported. But the threats of re-escalation still linger, benefiting the gold prices.
Meanwhile, hawkish remarks from Fed Chair Jerome Powell further turned the markets cautious. Powell’s testimony before Congress revealed that the Fed is still worried about inflation due to Trump’s tariffs. He said that the Fed is not in a rush to lower rates. They will monitor the tariff impacts and cut rates when the inflation and labor markets show evident signs of cooling. Markets are already pricing in a 50-basis-point rate cut by year-end and a 22% chance of a cut in July.
This tug of war between global risk sentiment and US monetary policy continues to keep the gold in a consolidation phase. On one hand, the improved risk sentiment tempers the demand for safe-haven gold. On the other hand, the Fed’s potential easing continues to support the metal.
Traders are now anxiously waiting for the macroeconomic data from the US. Tomorrow’s final Q1 GDP data and Friday’s Core PCE Index are particularly important to watch. Moreover, the Fed Chair’s second round of testimony before Congress is also the point of attention for the traders.
Until then, the gold futures are expected to consolidate between key levels of $3,300 to $3,350. A decisive break on either side may determine the next leg, as markets await direction from both the Fed and geopolitics.
