Anticipated surge in gold prices in the run-up to the forthcoming US Federal Reserve gathering
Gold prices are on the rise after a two-week decline, just ahead of the Federal Reserve's interest rate meeting. At 10:08 AM Moscow time, spot gold was trading at $3,260 per ounce, increasing by 0.6%, and hitting a daily high of $3,272.32. Last week, gold prices saw a dip of 2.4%. Gold futures for June delivery on the Chicago Mercantile Exchange were @ $3,273, up by 0.92%.
Investors are keeping a close eye on global trade prospects and U.S. economic data before the Fed's rate decision. Most expect the rate to stay put at the current level of 4.25-4.5%. However, U.S. employment data threw a surprise with a 177,000 increase in jobs, above analyst forecasts, and a constant unemployment rate of 4.2%. President Trump has added pressure on Powell, stating that with such robust employment data, there's no reason not to slash rates.
Trump's latest comments also played a role in the gold prices' trajectory. On May 4, he shared his thoughts on NBC, saying he's open to reducing tariffs on Chinese imports, with current triple-digit tariffs being too steep for businesses. These mutual tariffs between the two powerhouse economies currently total 125%, with an additional 20% U.S. tariff on Chinese goods, under the pretext of countering fentanyl shipments. However, Trump mentioned he doesn't plan to confer with Xi Jinping this week.
Gold prices have soared by about 25% since the start of 2025. Gold hit a record high of $3,500 in April before retreating slightly over a few weeks. The increased demand for safe-haven assets due to uncertainty surrounding Trump's trade and geopolitical policies, central bank purchases, and speculative interest from China have driven up gold prices.
Of note, President Trump's trade policy announcements and comments in 2025 have had a significant impact on gold prices, primarily through the implementation of reciprocal tariffs on strategic sectors. These tariffs have raised concerns about stagflation and had led to an influx of $3.8 billion into gold ETFs around April 7–13, reflecting heightened demand among investors. Gold prices surged to a record high of $3,245 per ounce on April 12, followed by a short-term correction when certain tariff suspensions were announced.
Gold prices have been on an upward trend due to the economic uncertainty, stagflationary risks, and supply chain disruptions brought about by the tariffs. These conditions have made gold an attractive safe-haven asset. During periods of volatility, gold's trading volumes in futures have skyrocketed, and there's a notable correlation (62%) between swings in the U.S. dollar index and adjustments in gold prices, indicating gold's role as a haven during volatile times.
- Investors are contemplating potential new futures in the finance industry as global trade prospects and U.S. economic data, such as unemployment rates, influence the Federal Reserve's decision-making process.
- Amidst this uncertainty, some analysts predict that Powell may reassess the interest rates, particularly given the recent robust employment data and President Trump's pressure to lower them.
- Meanwhile, the technology sector continues to evolve, with advancements in gadgets like smartphones, contributing to a dynamic investing landscape.
- The demand for safe-haven assets, like gold, has seen a substantial increase, particularly as investors grapple with the potential economic impact of tariffs and geopolitical uncertainties.
- In fact, gold prices have set new records in 2025, fueled by speculative interest from China and central bank purchases, reaching a peak of $3,500 in April.
- Real-estate markets, on the other hand, may face complexities as tariffs might lead to supply chain disruptions and stagflationary risks, potentially making gold a more appealing investment option in such volatile conditions.
