Gold prices steadied on Thursday after falling to their lowest level in over a month, as investors adjusted expectations around U.S. interest rate cuts and shifted cautiously away from risk assets.
Spot gold was little changed at $3,179.79 an ounce as of 12:18 p.m. London time, hovering near the $3,180 levels after Wednesday’s 2 percent decline.
The precious metal dipped to its lowest level since early April amid hawkish signals from the U.S. Federal Reserve, which dampened optimism for multiple rate cuts in 2025.
The recent retreat in bullion prices follows comments from Federal Reserve officials suggesting that inflation remains sticky and that monetary policy could stay restrictive for longer than anticipated.
Traders are now closely monitoring a scheduled speech by Fed Chair Jerome Powell later today, alongside key U.S. economic indicators including manufacturing activity, retail sales, initial jobless claims and producer price data.
“Tighter monetary policy and higher yields tend to weigh on non-interest bearing assets like gold,” said Christopher Wong, currency strategist at Oversea-Chinese Banking Corp. “If gold breaks below the $3,150-$3,050 support zone, prices may risk a deeper pullback toward $2,950.”
Gold, which traditionally serves as a hedge against inflation and economic uncertainty, has come under renewed pressure as risk-on sentiment returns to the market. Earlier optimism driven by easing U.S.-China trade tensions and expectations of looser monetary policy has recently faded, resulting in volatile investor positioning.
Despite the pullback, gold remains up over 20 percent year-to-date, supported by robust demand from exchange-traded funds (ETFs), strong central bank buying, and speculative interest from Chinese investors.
Market watchers noted that bullion largely ignored geopolitical developments, including U.S. President Donald Trump’s remarks about nearing a nuclear agreement with Iran. Typically, easing geopolitical tensions dampen gold’s safe-haven appeal.
Other precious metals showed mixed performance. Silver declined marginally, while palladium and platinum posted moderate gains. Meanwhile, the Bloomberg Dollar Spot Index slipped 0.2 percent, offering marginal support for gold prices by making the metal slightly more attractive to holders of other currencies.
As investors await further clarity on the Federal Reserve’s rate trajectory, short-term gold price direction is likely to remain tied to macroeconomic data and central bank commentary. Analysts anticipate that any deviation from expected policy tightening could trigger renewed buying interest in bullion.
With global markets on edge and inflation dynamics still evolving, gold’s next move will depend heavily on the balance between interest rate expectations and appetite for risk assets.
