Gold prices soared to a new all-time high of $3,052 per ounce on Wednesday after the US Federal Reserve (Fed) held interest rates steady, signaling possible rate cuts later this year. At the time of writing, the XAU/USD pair trades volatile between $3,035 and $3,050, up over 0.20%.
The Fed kept rates unchanged at 4.25%-4.50% and announced a planned balance sheet runoff in April. In its statement, the Fed acknowledged solid labor market conditions but flagged that inflation remains “somewhat” elevated. It reaffirmed a cautious approach, monitoring risks to both employment and price stability.
Fed projections now hint at two rate cuts in 2025, keeping the fed funds rate at 3.9% — unchanged from December forecasts. However, inflation and unemployment projections were revised upward, while economic growth is expected to slow below the 2% mark amid President Donald Trump’s trade policies.
Also Read: Gold and Silver rates at all time high
Following the decision, Fed Chair Jerome Powell addressed growing economic uncertainties, saying, “Uncertainty around the (economic) outlook has increased,” and adding that tariff-related inflation has been passed to consumers. “Our current policy stance is well positioned to deal with the risk and uncertainties we face,” Powell stated.
Geopolitical Risks Fuel Gold’s Rally
Ongoing geopolitical tensions further boosted safe-haven demand for gold. Russia-Ukraine hostilities continued despite ceasefire talks, while the Middle East conflict escalated, with Israeli airstrikes killing 400 people on Tuesday, according to Reuters.
Gold Rally Driven by Falling Yields and Fed Rate Cut Bets
US real yields plunged, supporting gold’s bullish momentum. The US 10-year T-note yield dropped three basis points to 4.254%, while the US Dollar Index (DXY) rose 0.27% to 103.54. Meanwhile, US 10-year TIPS yield, which moves inversely to gold prices, fell 5.5 bps to 1.935%.
Hikes in gold price
The Fed’s Summary of Economic Projections (SEP) forecasts:
- Fed funds rate at 3.9% in 2025, 3.4% in 2026, and 3.1% in 2027
- GDP growth at 1.7% in 2025, down from 2.1%
- Unemployment near 4.3%-4.4% through 2027
- PCE inflation at 2.7% in 2025, 2.2% in 2026, and 2% in 2027
- Core PCE inflation ending 2025 at 2.8%
Markets are now pricing in 65.5 basis points of Fed easing in 2025, driving Treasury yields and the US Dollar lower — both bullish signals for gold.
Gold Technical Outlook: Rally Eyes $3,100
Gold’s uptrend remains strong, clearing the key $3,050 resistance. The Relative Strength Index (RSI) is overbought but remains below the extreme 80 level, signaling continued momentum.
If XAU/USD maintains support above $3,000, the next target is the $3,100 mark. A drop below $3,000 would find support at $2,954 (February 20 high), followed by the $2,900 level.
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