Gold holds decline after Fed chair Jerome Powell flags pause in Fed easing cycle

MELBOURNE – Gold held a slight decline after US Federal Reserve chair Jerome Powell said officials will not rush to lower US interest rates, adding that the central bank is pausing easing to see further progress on inflation.

Bullion traded near US$2,760 an ounce, within about US$30 of its all-time high. On Jan 29 it eased 0.2 per cent, as the Federal Open Market Committee kept interest rates unchanged.

Mr Powell told reporters that the US economy remains strong and borrowing costs are no longer as much of a restraint on activity as previously.

Following the comments, swaps traders pared back their expectations for rate reductions in 2025 by pricing in 43 basis points of cuts compared with 48 before, with the first reduction not expected until mid-2025. Higher rates tend to pose a headwind for gold, as it does not pay interest.

The Fed’s stance comes as US President Donald Trump casts considerable uncertainty over the broader economic outlook by

threatening to slap tariffs

on imports and promising to lower taxes, both of which could put upward pressure on inflation.

When asked about the potential impacts of the new administration’s policies, Mr Powell said the central bank was in a “wait-and-see” mode.

Spot gold was little changed at US$2,759.39 an ounce at 8.16 am. The Bloomberg Dollar Spot Index was down 0.2 per cent. Silver was steady, while platinum and palladium rose. BLOOMBERG