Gold prices are seen to be experiencing a more cautious trend after the market assessed the potential for a US Fed interest rate cut this year is fading. High attention will be given to the FOMC meeting that will take place early Thursday morning.
At 8.40 am, gold prices were at $5,002, down 0.08% since it opened in early trading on Tuesday in the Asian session.
Crude oil prices remained above $100 a barrel as tensions in the Middle East continued to rise, as the conflict between the United States, Israel and Iran entered its third week.
The surge in oil prices raised concerns that global inflationary pressures will rise again.
This situation has weakened market expectations for the possibility of interest rate cuts in the near future, which could potentially put pressure on non-yielding assets such as gold.
Bob Haberkorn, senior market strategist at RJO Futures, explained that rising oil prices usually increase inflation. As inflation rises, central banks tend to hold interest rates longer, reducing support for gold prices.
In related news, the US Federal Reserve is expected to keep its benchmark federal funds rate at its current range of 3.50% to 3.75% at its March monetary policy meeting on Thursday.
Market analysts expect the Fed to still have the potential to cut interest rates in 2026. However, the number and size of such cuts remain uncertain given the uncertainty over inflation and current geopolitical developments.
Meanwhile, traders in the interest rate futures market are currently expecting only one rate cut this year, likely in December. This expectation is based on the latest assessment by the CME FedWatch Tool.
