Gold Holds Steady as Markets Await Fed Decision and Trump’s Trade Moves

Gold prices remained largely unchanged in Asian trading on Wednesday as investors braced for the Federal Reserve’s policy decision amid growing uncertainty surrounding U.S. trade policies under President Donald Trump.

Spot gold was muted at $2,762.64 per ounce, while gold futures for February delivery edged up 0.1% to $2,796.06 an ounce as of 01:22 ET (06:22 GMT).

Key Factors Influencing Gold Prices

1. Federal Reserve Meeting: Dovish or Hawkish?

Markets are focused on the Fed’s two-day policy meeting, which is expected to conclude with interest rates remaining unchanged. However, investors are keenly watching for any signals on inflation risks and the potential timing of rate cuts in 2025.

A dovish stance could push gold prices to new highs, as lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.

2. Trump’s Tariff Threats: Inflation and Market Volatility

Trump’s renewed push for aggressive import tariffs—targeting steel, aluminum, and pharmaceuticals—has raised concerns over escalating trade tensions and inflationary pressures.

Additionally, the expected 25% tariff on Canadian and Mexican imports from February 1, along with potential additional duties on Chinese goods, has fueled risk-off sentiment, boosting safe-haven demand for gold.

3. Lunar New Year Holiday in China

The Lunar New Year celebrations in China, the world’s largest gold consumer, have led to subdued trading volumes. Once the holiday period ends, gold demand could see a revival, impacting price movements.

4. U.S. Dollar and Bond Yields

The U.S. Dollar Index edged 0.1% lower on Wednesday after a 0.5% surge on Tuesday, slightly easing pressure on gold. A weaker dollar generally supports gold prices by making the metal cheaper for foreign buyers.

Other Precious Metals Stay Muted

• Platinum Futures: Unchanged at $958.25 an ounce
• Silver Futures: Flat at $30.848 an ounce

Copper Slides as Trump’s Tariff Plans Hit Industrial Metals

Copper prices continued to retreat as concerns over Trump’s potential import tariffs on industrial metals weighed on market sentiment.

Adding to the pressure, China’s weakening factory activity and ongoing property sector struggles have cast doubts on future demand. The latest data showed manufacturing contracted in January, ending a three-month growth streak.

• Benchmark Copper Futures (LME) fell 0.3% to $8,995.90 per ton
• February Copper Futures dropped 0.7% to $4.2197 per pound

Market Outlook

• If the Fed signals a dovish stance, gold could break into record territory.
• Further tariff escalations may boost gold’s safe-haven appeal but pressure industrial metals like copper.
• China’s post-holiday demand recovery will be crucial in determining short-term trends for precious and base metals.