Gold prices remained steady during Wednesday’s Asian trade, as investors brace for the United States Federal Reserve’s policy decision later in the session.
By 3:45 pm AEDT (4:45 am GMT) spot gold was unchanged at US$2,763.14 per ounce, just 1% below record highs.
Markets widely expect the Fed to keep interest rates unchanged in this meeting, with attention shifting to Powell’s guidance on future cuts.
Powell’s tone will be pivotal. If he signals confidence in disinflation while acknowledging a softening labour market, markets may interpret it as a dovish hold, reinforcing expectations for rate cuts and lifting gold prices to fresh highs.
Conversely, if Powell emphasises inflation risks - potentially exacerbated by President Donald Trump’s trade and immigration policies - the Fed may adopt a more prolonged restrictive stance, limiting gold’s upside.
Gold continues to draw support from a broadly subdued U.S. dollar, while ongoing Lunar New Year holiday closures in China, Singapore, and Hong Kong contributed to thin trading conditions.
Meanwhile, markets are recovering from the recent AI-driven tech sell-off, triggered by China’s low-cost artificial intelligence (AI) model, DeepSeek, with investors looking towards earnings reports from U.S. tech giants, including Microsoft, Meta, and Tesla, due later today.
Should these earnings disappoint and budget forecasts fail to inspire confidence, a renewed global tech sell-off could emerge. This scenario may push investors into a risk-off mode, potentially benefiting gold as a safe-haven asset. However, if the Fed maintains a hawkish stance, gold could struggle to hold onto its gains and face renewed selling pressure.
