Market Data 
- Gold hits new all-time high as Trump’s tariff threats fuel trade war fears.
- Fed minutes reveal concerns over inflation risks, weighing on rate-cut expectations.
- Traders eye US jobless claims and S&P Global Flash PMIs for further market cues.
Gold prices retreated on Wednesday during the North American session after the latest Federal Reserve’s (Fed) monetary policy minutes showed that all policymakers voted to keep rates unchanged at the January meeting. XAU/USD trades at around $2,925, down 0.31%.
The minutes showed that Fed officials judged the dual mandate risks to be roughly balanced, while “some participants cited potential changes in trade and immigration policy as having potential to hinder the disinflation process.” Participants noted that some measures of inflation expectations “had increased recently.”
Earlier, Gold hit a new all-time high of $2,946 during the European session after United States (US) President Donald Trump revealed that he would impose 25% tariffs on automobiles, pharmaceuticals and chip imports.
The non-yielding metal edged up amid the trade war scenario. However, it turned negative after the release of the Fed’s minutes.
Market participants will watch the release of last week’s initial jobless claims and S&P Global Flash PMIs.
Daily digest market movers: Gold price losses steam after reaching record high
- The US 10-year Treasury bond yield falls one and a half basis points (bps) and yields 4.535%.
- US real yields, which correlate inversely to Bullion prices, drop two-and-a-half basis points to 2.072%, a headwind for Bullion prices.
- Due to weather disruptions, January’s US Housing Starts slid from 1.515 million to 1.366 million, or a 9.6% plunge.
- US Building Permits for the same period improved, rising from 1.482 million to 1.483 million, a 0.1% increase.
- Goldman Sachs upward revised XAU/USD price to $3,100 by year’s end as the investment bank said “structurally higher” central bank demand will add 9% to the price of the non-yielding metal.
- The World Gold Council (WGC) revealed that central banks purchased more than 54% YoY to 333 tonnes following Trump’s victory, according to its data.
- Money market fed funds rate futures are pricing in 40 basis points of easing by the Fed in 2025.
XAU/USD technical outlook: Gold price faces stir resistance and retreats
Gold price remains upwardly biased, though during the last seven days it has remained unable to clear the $2,950 hurdle. Price action seems overextended, further reinforced by buyers losing steam.
The Relative Strength Index (RSI) is about to exit overbought territory, which could lead to lower Gold prices. The first support would be the February 14 swing low of $2,877, followed by the February 12 daily low of $2,864.
On the other hand, if XAU/USD rises past $2,946, the first resistance would be the psychological $2,950, followed by $3,000.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
