In the early trading on Thursday, spot gold slightly rebounded near $3375.58 per ounce, showing a low-level consolidation trend. On Wednesday, gold prices fell by nearly 2%, reaching a low of $3360.18 per ounce, and closing at $3364.32, officially breaking the $3400 mark.
This round of gold price adjustment is mainly influenced by two factors. On one hand, positive signals from international trade negotiations have reduced the appeal of gold as a safe-haven asset. On the other hand, the Federal Reserve's latest meeting kept rates unchanged, but Chairman Powell's unexpectedly hawkish remarks at the press conference propelled the dollar index to its largest one-day gain in two weeks, increasing downward pressure on gold prices.
Federal Reserve's Hawkish Stance Suppresses Gold Prices
Following the two-day FOMC meeting, the Federal Reserve announced that it would maintain the federal fund rate target range at 4.25%-4.50%. However, both the statement and Powell's comments delivered more hawkish signals, indicating that the Federal Reserve remains highly vigilant regarding inflation.
Powell pointed out significant uncertainties in the current economic environment, particularly the potential impacts of the Trump administration's tariff policies. He stated, "We do not know how these policies will develop, nor how to adjust monetary policy in response." This attitude was interpreted by the market as an indication that the Federal Reserve will not cut rates rashly in the short term.
Meanwhile, the US dollar surged significantly, directly restraining gold priced in dollars. The dollar index rose by 0.64%, reaching 99.90, marking the largest single-day gain since April 23.
Gold Faces Multiple Headwinds but Still Finds Support
Despite facing various pressures, gold prices are not without support. There is still a degree of "buying on dips" in the market, especially in the context of investors' cautiousness about inflation and geopolitical risks.
Furthermore, data from the People's Bank of China showed that China increased its gold reserves for the sixth consecutive month in April, indicating that officials remain optimistic about gold's long-term value. This has been interpreted as a strategic allocation inclination by policy institutions towards gold, partially alleviating the downward pressure on its price.
Bank of America remains optimistic in the medium to long term, predicting in its latest report that although the upside space for gold may be limited in the short term, prices are expected to regain momentum in the second half of 2025, possibly challenging the significant $4000 per ounce level.
Market Outlook: Focus Remains on Federal Reserve and Trade Talks
Currently, market sentiment remains in a state of contention. On one hand, the Federal Reserve emphasizes "the dual risks of inflation and unemployment," meaning its monetary policy will be more cautious under the pressure of its "dual mandate." On the other hand, if there are substantial advances in trade talks, it could continue to curb safe-haven demand.
Institutions like Goldman Sachs and UBS believe that until there is a marked shift in data, the Federal Reserve will maintain a "wait and see" stance. This suggests that gold may continue to fluctuate between $3300 and $3400 in the short term, awaiting new directional guidance.
Investors need to keep an eye on the upcoming US employment, CPI, and other key data, as well as further developments in international trade negotiations over the weekend, which will be crucial variables affecting the next move in gold prices.
