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Gold prices rose on Wednesday, hovering near record highs, as expectations of further rate cuts persisted despite US Federal Reserve Chair Jerome Powell’s cautious remarks, while geopolitical uncertainty continued to underpin demand for the metal.
Prices were recovering from an earlier low of $3,750.49 hit during the session, amid profit-taking following its record high of $3,790.82 on Tuesday.
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US gold futures for December delivery edged down 0.2 per cent to $3,808.
“Gold is currently driven largely by monetary policy expectations in the United States, with some influence from political risk,” said Capital.com analyst Kyle Rodda.
“Hawkish rhetoric from US President Donald Trump regarding NATO defense may be slightly raising geopolitical stakes, and these factors are supporting the market.”
NATO warned Russia on Tuesday that it would use “all necessary military and non-military tools” to defend itself, as Trump shifted rhetoric by asserting Ukraine could recover all territory occupied by Russia.
Powell said on Tuesday the central bank needed to continue balancing the competing risks of high inflation and a weakening job market in coming rate decisions, even as his colleagues staked out arguments on both sides of the policy divide.
The US weekly initial jobless claims report is due on Thursday, followed by the Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, on Friday.
“If Friday’s data indicates inflation is rising more than policymakers might prefer, possibly due to tariffs, it could exert downward pressure on gold,” said Rodda.
Goldman Sachs said in a note dated Tuesday it expects 25 basis point of cuts in October and December, with a 50 basis point reduction possible if the labour market deteriorates more than anticipated, followed by two cuts in 2026 to a range of 3 per cent-3.25 per cent.
Gold, considered a safe-haven asset during broader uncertainty, tends to perform well in low-interest rate environment.
