Gold holds Gains ahead of Fed meeting: Will Inflation risks shift Market sentiment?

Gold prices are trading flat as the European session begins, with traders awaiting the outcome of the Federal Reserve meeting later today. While central bank officials are widely expected to keep interest rates unchanged, market participants will be eager to gauge the policymaker's stance, particularly regarding inflation risks and the timing of potential rate cuts. The price of the precious metal has gained over 5.5% in January, primarily driven by a decline in Treasury yields and a softer US dollar. However, the threat of tariffs from the new US administration remains a key concern due to their potential inflationary impact. Against this backdrop, a dovish-leaning Fed is likely to support gold prices, whereas any remarks highlighting inflation risks and the need to maintain elevated interest rates for longer could push Treasury yields higher, strengthen the dollar, and weigh on the non-yielding metal.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

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