Gold prices fell in European trade on Thursday on track for the second loss in a row, hitting a week low under pressure from the stronger US dollar.
The Federal Reserve maintained interest rates unchanged for the fourth meeting in a row, and said it won’t rush into policy easing, while expecting two rate cuts by the end of 2025.
The Price
Gold prices fell 0.65% today to $3347 an ounce, a week low, with a session-high at $3388.
On Wednesday, gold lost 0.55% away from a two-month high at $3451 on profit-taking.
The Dollar
The dollar index rose 0.2% on Thursday on track for the fifth profit in a row, hitting a week high at 99.10 against a basket of major rivals.
It comes amid increasing haven demand on the greenback as the Iran-Israel military strikes mount, with the possibility of a US entry.
The Fed
The Federal Open Market Committee voted to hold interest rates unchanged at below 4.5% as expected by analysts.
The FOMC expects two 0.25% interest rate cuts by the end of 2025, while reducing expected future cuts in both 2026 and 2027 by once each.
The statement showed persistent uncertainty among Fed officials on the future of interest rates, but overall, the Fed expects rates to reach 3.4% by 2027.
The Fed said that despite changes in net exports, recent indicators still show strong economic growth, with unemployment still low.
Economic Outlook
The Fed changed most of the economic outlook as follow:
Growth: The Fed reduced US growth outlook this year from 1.7% to 1.4%, and in 2026 from 1.8% to 1.6%, and maintained 2027 at 1.8%.
Inflation: The Fed raised the inflation outlook this year to 3.0% from 2.7%, and to 2.4% in 2026, and to 2.1% in 2027.
Core inflation: The Fed expects 3.1% core inflation in 2025, then 2.4% in 2026, and 2.1% in 2027.
Interest rate target is estimated at 4% this year, 3.5% next year, and 3.25% in 2027.
Powell
Fed Chair Powell said the impact of tariffs will become clearer during the summer, and as long as growth remains strong and inflation down, the proper decision would be to maintain current monetary policies.
US Rates
According to the Fedwatch tool, the odds of a Fed July 0.25% rate cut rose to 17%, while the odds of such a cut in September rose to 66%.
SPDR
Gold holdings at the SPDR Gold Trust rose 1.43 tons yesterday to a total of 947.37 tons, the highest since April 24.
