The Aftermath of the Fed’s Rate Hold

The Federal Reserve held interest rates steady but removed references to progress toward its 2% inflation target, signaling elevated inflation concerns. Policymakers acknowledged strong economic growth and a resilient labor market, suggesting a longer-than-expected high-rate environment.

This would have pressed #XAUUSD, but while the Fed remained hawkish, other central banks adopted dovish policies, supporting gold as an alternative asset. As a result of yesterday, the Bank of Canada (BoC) ended its quantitative tightening, cutting rates by 25 bps. The Swedish Riksbank also delivered a cut.

In the meantime, the European Central Bank (ECB), the Reserve Bank of India (RBI), and the People’s Bank of China (PBoC) are expected to ease their monetary approach in the coming period.

This was enough to drive the metal higher. Our outlook on gold has not changed. It remains in a tug-of-war between the Fed’s restrictive stance and global monetary easing. While higher U.S. rates cap XAUUSD’s upside, lower yields elsewhere and potential market uncertainty support demand for the metal.

BTCUSD also rose past $105,000 after Fed Chair Jerome Powell said banks are “perfectly able” to serve crypto customers in ways that comply with anti-money laundering and Bank Secrecy Act requirements.

Markets will watch for further guidance from the ECB rate decision and upcoming U.S. inflation data to gauge the next move. 

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