Gold prices extended their muted performance in Asian trading on Thursday, as markets assessed the implications of a hawkish Federal Reserve policy decision, while uncertainty around U.S. tariffs stoked further caution.
XAU/USD edged 0.1% higher to $2,765.64 per ounce, while Gold Futures expiring in February rose 0.3% to $2,803.39 an ounce by 01:45 ET (06:45 GMT).
Investors assess Fed comments amid US tariff concerns
The Fed maintained its benchmark interest rate overnight, with Chair Jerome Powell indicating no immediate plans for rate cuts.
Fed officials emphasized their commitment to maintaining restrictive monetary policy until they gain more confidence that inflation is sustainably moving toward the Fed’s 2% target.
Higher interest rates lead to lower gold prices, as it makes the yellow metal less attractive compared to interest-bearing assets.
With Fed rates remaining higher for longer, it is expected to boost the dollar, which could create downward pressure on gold.
The US Dollar Index was largely unchanged in Asian trading on Thursday.
However, analysts believe that gold will be supported by its safe-haven demand amid trade-war escalations if tariffs are enacted aggressively, which could lead to higher inflation and increased volatility.
Trump’s renewed push for aggressive tariffs on imports—including steel, aluminum, and pharmaceuticals—has amplified these concerns.
Trump is expected to implement a 25% tariff on imports from Canada and Mexico starting February 1, with potential additional tariffs on Chinese goods.
Other precious metals were higher on Wednesday. Platinum Futures rose 1.1% to $993.75 an ounce, while Silver Futures gained 1% to $31.70 an ounce.
Copper falls as industrial metals tariff loom
Copper prices were subdued on Thursday as markets grappled with Trump’s proposed import tariffs on industrial metals.
“A prolonged trade conflict would slow global growth and hurt demand. Tariffs are a major headwind to metals, whether in force yet or not,” ING analysts said in a note.
Benchmark Copper Futures on the London Metal Exchange inched 0.3% lower to $9,049.70 a ton, while February Copper Futures fell 0.5% to $4.2677 a pound.
