Gold prices remained largely stable following the Federal Reserve’s monetary policy decision last Wednesday, according to Thu Lan Nguyen, Head of FX and Commodity Research at Commerzbank. She noted that the market reaction was muted, as the interest rate developments were largely in line with expectations.
Although the Fed held interest rates unchanged, the majority of FOMC members still anticipate two rate cuts later this year, which aligns with what markets have been pricing in via Fed Funds futures.
Nguyen emphasized that it was not the decision itself, but the consistency in rate cut expectations, that helped keep gold stable. She pointed out that seven out of nineteen Fed members no longer expect any rate cuts in 2025, compared to just four in the previous forecast – a slight shift toward a more hawkish tone. However, markets had already begun adjusting their expectations since May.
While a rate cut may not trigger a sharp gold rally, many analysts believe it will continue to act as a supportive factor, helping gold maintain stability amid economic and policy uncertainty.
Gold remains a traditional safe haven, but its short-term direction is now closely tied to the Fed's rate trajectory, keeping investors cautiously on edge as they await clearer signals.
