Gold prices set another all-time record above $5,150 amid a decline in the US dollar, ongoing geopolitical tensions and market anticipation of the Fed’s FOMC interest rate meeting this week.
At 9.15 am, gold prices were at $5,189, up 0.18% since it opened in early trading Wednesday in the Asian session.
US President Donald Trump on Tuesday said the US dollar (USD) was at a high level when asked if the currency had weakened too much.
The statement put pressure on the US Dollar Index (DXY), which fell to its lowest level since February 2022. This in turn provided support for the prices of USD-denominated commodities, including gold.
At the same time, global uncertainty and the threat of a trade war prompted investors to seek safe-haven assets, thus increasing demand for safe-haven currencies.
Throughout January, Trump has stoked market fears with a series of aggressive statements, including threats to take over Greenland, imposing additional tariffs on European countries, accusing Fed Chairman Jerome Powell, and interfering in the leadership of Venezuela.
Most recently on Saturday, he threatened to impose a 100 percent tariff on Canadian goods if the country signs a trade deal with China.
In terms of monetary policy, the US Fed is expected to maintain the federal funds rate in the range of 3.50 to 3.75 percent. The decision follows after the Fed cut its benchmark interest rate at three consecutive meetings at the end of last year.
The market is now focused on Fed Chairman Jerome Powell's statement at an upcoming press conference for further monetary policy direction.
Any aggressive tone from Fed officials has the potential to limit pressure on the USD and influence gold price movements in the near term.
