Anticipated increase in gold prices in the wake of the upcoming US Federal Reserve meeting
Gold prices are on the up after taking a dip for two weeks, with prices currently at $3,260 per ounce as the Federal Reserve prepares to announce their interest rate decision, according to a report by Bloomberg. Gold hit a daily high of $3,272.32 at 10:08 AM Moscow time, having fallen by 2.4% last week.
Gold futures for June delivery on the Chicago Mercantile Exchange are trading at $3,273, a 0.92% increase. Investors are keeping a close eye on global trade prospects and U.S. economic data before the Fed's rate decision. Many experts expect the rate to stay steady at 4.25-4.5%.
However, U.S. employment data surpassed expectations with an increase of 177,000 jobs and a stable unemployment rate of 4.2%. Despite this, President Trump has been putting pressure on Federal Reserve Chairman Jerome Powell, stating that with such strong employment data, there's no reason not to lower interest rates.
Trump's recent comments have also been influencing gold prices. On May 4, he suggested that he might be open to reducing tariffs on Chinese imports. Given that existing mutual tariffs between the two largest economies total 125%, with an additional 20% U.S. tariff on Chinese goods, any change in tariffs could have significant implications for the global economy. However, Trump confirmed that he has no plans to speak with Chinese President Xi Jinping this week.
Gold prices are now approximately 25% higher than at the beginning of 2025. In April, gold reached a record high of $3,500 before dipping slightly over a few weeks. While Trump's trade policies initially drove up the demand for safe-haven assets like gold, current high gold prices are primarily due to factors such as central bank purchases, speculative demand from China, and ongoing global economic uncertainty.
Since Trump's presidency ended in January 2021, gold prices have continued to surge, with gold starting 2024 at about $2,071.80 per ounce and rising to around $2,385.70, a 15% increase within the year, with forecasts predicting gold to exceed $3,000 by the end of 2025. Analysts suggest that gold is experiencing one of its strongest market periods ever, with significant inflows into gold funds and record central bank buying. Other factors, such as US dollar weakness and global economic uncertainties, are contributing to the current gold price surge.
In the new financial landscape, gold prices continue to rise in the ever-evolving global industry, with experts projecting a potential surge above $3,000 by the end of 2025, driven by factors such as central bank purchases, speculative demand from China, and ongoing economic uncertainties. As technology advances and trade policies shift, these factors could influence gold's position in the finance sector, potentially creating new avenues for investment.
