Gold Rises on Fed Economic Warning, but Gains Capped by Trade Deal Speculation

Gold prices advanced in Asian trading on Thursday, supported by a renewed flight to safety after the Federal Reserve flagged concerns over the economic outlook amid lingering global trade tensions. However, broader gains were capped as markets digested mixed signals on upcoming U.S. trade developments.

Spot gold climbed 0.8% to $3,389.00 per ounce, while gold futures for June delivery edged up 0.1% to $3,394.99 per ounce by 00:36 ET (04:36 GMT).

Fed Signals Caution Amid Tariff Headwinds

Gold’s uptick followed the Federal Reserve’s decision on Wednesday to keep interest rates unchanged, while issuing a cautious tone on the economic outlook. Chair Jerome Powell noted that the central bank was in no rush to initiate rate cuts, emphasizing a “wait-and-see” approach due to elevated uncertainties stemming from U.S. trade policies — particularly tariffs imposed by the Trump administration.

Despite maintaining the current policy rate, Powell’s comments on mounting downside risks to growth — including continued tensions with China — reignited demand for traditional safe-haven assets like gold.

Although high interest rates generally dampen bullion’s appeal due to the opportunity cost of holding non-yielding assets, ongoing global disruptions and weak economic data from both the U.S. and China are bolstering gold’s resilience.

Trade Deal Optimism Fails to Lift Market Sentiment

U.S. President Donald Trump said on Wednesday he would unveil a major trade deal on Thursday. However, initial excitement waned following reports that the deal was likely with the United Kingdom — a partner not directly affected by Trump’s recent tariff hikes. Analysts noted that such a deal, while politically significant, may have minimal economic impact given the limited trade imbalance between the two nations.

Gold had slumped earlier this week after the U.S. and China confirmed they would hold trade talks in Switzerland. Yet sentiment remained cautious, as both sides showed few signs of compromise, dampening hopes for a near-term resolution to their prolonged trade war.

Broader Metals Market Rebounds

Other precious metals followed gold’s lead on Thursday. Platinum futures rose 0.8% to $986.85 per ounce, while silver futures added 0.8% to $33.04 per ounce, rebounding from earlier losses triggered by a spike in the U.S. dollar.

In industrial metals, copper prices gained on signs of stabilization in China’s economy. Benchmark copper futures on the London Metal Exchange rose 0.4% to $9,458.70 a ton, while U.S. copper futures climbed 1.1% to $4.6710 a pound.

Outlook

While gold remains sensitive to interest rate dynamics and dollar movements, its near-term trajectory is likely to be dictated by developments in U.S.-China trade negotiations and macroeconomic indicators. With markets facing ongoing volatility and geopolitical risks, demand for gold as a hedge remains robust heading into the second half of the year.