Gold Holds Steady as Markets Scale Back Rate Hike Bets
Gold prices maintained modest gains after the Federal Reserve decided to keep interest rates unchanged. XAU/USD hovered around US$4,056 per troy ounce after rising nearly 1% in the previous trading session.
The Fed held rates steady in a 9-to-3 vote. The split decision indicated that some officials are beginning to view higher borrowing costs as necessary to curb inflationary pressures.
Fed Chair Kevin Warsh emphasized that interest rates could be raised again if inflation remains persistently high. However, the market believes the central bank will not hike rates in the immediate future and has begun shifting expectations for a hike to later in the year.
This shift in expectations pushed short-term Treasury yields lower. Lower yields reduced the opportunity cost of holding non-yielding gold, triggering renewed buying following sharp downward pressure in recent months.
Gold continues to find support from buying activity whenever prices dip toward the US$4,000 level. Some market participants see room for a rally toward US$4,200, although rising energy costs and inflation risks could still limit upward momentum.
Consequently, gold is likely to sustain its recovery trend as long as prices remain above US$4,000 and short-term yields stay low. However, signals of a Fed rate hike or an escalation in conflict driving up oil prices could trigger sharp volatility and sudden corrections at any time.
Source: Newsmaker.id
