Fed Clings to Caution as Markets Turn Volatile, Gold Takes the Hardest Hit

The Federal Reserve’s latest policy statement and remarks from Chair Jerome Powell reflected a phase of deliberate caution, as the central bank opted to keep interest rates unchanged, signaling that monetary policy is likely to remain stable in the near term.

This approach underscores the Fed’s preference to closely monitor economic developments before making any additional policy moves. Powell stressed that future decisions will be fully dependent on incoming economic data, as well as broader economic and political developments ahead of each meeting.
Powell also made clear that the Federal Reserve is not following a pre-set policy path. Instead, each stage of the cycle is assessed on its own merits, adding that the central bank is in a strong position that allows it to wait and gather more information before adjusting its stance.


He further noted that the US economy has once again surprised on the upside, pointing to continued economic momentum despite ongoing challenges. This language echoed similar references in the policy statement highlighting the resilience of economic activity.


At the same time, the Fed acknowledged that economic activity continues to expand at a solid pace, while inflation remains above its target level, signaling that the battle against price pressures is not yet over. The statement also noted that job growth has moderated, while the unemployment rate has shown signs of stabilization, reflecting a fragile balance in the labor market.

Taken together, these signals suggest that the Federal Reserve is leaning toward a prolonged pause rather than moving closer to monetary easing at this stage. The repeated emphasis on data dependence, combined with confidence in economic strength and persistent inflation risks, reinforces a more conservative policy stance.

This messaging implies that the Fed sees no urgency to cut interest rates and prefers to wait for clearer signals, particularly in an economic environment still shaped by uncertainty and shifting dynamics.

As a result, the Fed delivered a clear message to markets: no additional easing in the near term, but continued close monitoring of economic data before any new policy move.
This cautious tone triggered broad volatility across financial markets, with gold among the biggest losers, falling by nearly 4% under pressure from a stronger US dollar.