Gold Steady at $5,000 Awaiting the Fed, Middle East Risks Support
Gold prices (XAU/USD) moved flat around the psychological level of $5,000 at the start of the Asian session on Wednesday. Market participants tended to hold positions ahead of the US Federal Reserve's (The Fed) interest rate decision.
At the same time, escalating tensions in the Middle East maintained interest in gold as a safe-haven asset. The conflict involving Iran and dynamics in the Gulf region have the potential to increase demand for safe havens in the region.
However, gold's upward momentum was tempered by renewed inflation concerns, which have been fueled by rising energy prices. The surge in oil prices, which is seen as reducing inflationary pressures, has led the market to adjust its expectations for the timing of a US interest rate cut.
This change in expectations is reflected in Goldman Sachs' projections, which now see interest rate cuts in September and December, compared to their previous estimates of June and September. From a market perspective, higher inflation tends to make central banks less aggressive in cutting interest rates, which can reduce the appeal of non-yielding assets like gold.
The Fed itself is expected to maintain interest rates in the target range of 3.50% to 3.75% at its March meeting. Market focus then shifts to Fed Chairman Jerome Powell's statement to gauge the next policy direction.
A more hawkish tone from Powell has the potential to boost the US dollar and pressure dollar-denominated commodities in the short term. Thus, gold's current movement is at a crossroads between safe-haven support from geopolitical risks and pressure from the prospect of higher interest rates for longer. (asd)
Source: Newsmaker.id
