Gold prices dipped on Wednesday (Jan. 29) following the U.S. Federal Reserve’s decision to keep interest rates unchanged and Chairman Jerome Powell’s indication that the central bank will not rush to further ease monetary policy. The rise in U.S. Treasury bond yields and the strengthening of the U.S. dollar after the Fed meeting also put downward pressure on the precious metal.
At the close of trading in New York, spot gold fell by $5.20/oz from the previous session’s close, equivalent to a drop of nearly 0.2%, settling at $2,758.80/oz, according to data from Kitco.
As of early morning trading in Asia on Jan. 30, spot gold rose by $2.50/oz compared to the previous close, equivalent to an increase of nearly 0.1%, trading at $2,761.30/oz. Converted at Vietcombank’s selling exchange rate, this is equivalent to VND 84.2 million/troy ounce.
At the conclusion of its first monetary policy meeting of 2025, the Fed kept the federal funds rate unchanged at 4.25-4.5%. In a statement following the meeting, the Fed took a more cautious stance on the persistence of inflation, explaining its decision to stand pat on rates. However, the market had anticipated the Fed’s decision to hold rates steady at this meeting.
“The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain robust. Inflation has remained somewhat high,” the Fed statement read.
The Fed cut rates three times in the final three meetings of last year, totaling a full percentage point. Moving into 2025, the Fed faces a more uncertain environment, as President Donald Trump’s policies, such as tariffs, domestic tax cuts, and the deportation of illegal immigrants, could lead to persistently higher inflation in the U.S.
Last week, Trump called for “an immediate rate cut,” but the outcome of this Fed meeting demonstrated the independence of the world’s most powerful central bank from political pressure.
At a press conference following the two-day policy meeting, Chairman Powell said he had not been in contact with Trump since the president’s call for lower rates. During Trump’s first term, his relationship with the leader of the world’s most powerful central bank was less than amicable.
Powell stated that it was too early to determine the impact of Trump’s policies and that the Fed would take time to assess the new administration’s policies. He also reaffirmed the Fed’s position that it would not rush to cut rates.
Recently, gold prices surged to near-record highs due to risk aversion amid uncertainties surrounding Trump’s policies. The precious metal market is showing signs of stabilizing near the peak as it awaits new catalysts for a stronger breakout.
The U.S. dollar strengthened during Wednesday’s trading session, with the Dollar Index closing at 107.94, up from the previous session’s close of 107.87. The yield on the 10-year U.S. Treasury note rose to 4.53% from 4.52%.
“Prices of some assets, including gold, fell slightly after the Fed’s statement, which signaled a more hawkish stance,” said Tai Wong, an independent precious metals trader in New York, in an interview with Reuters.
Some analysts suggested that the Fed’s delay in cutting rates could put downward pressure on gold prices in the near term.
“The Fed is probably asserting its independence in the face of Trump’s demands for lower rates. But I think the policy path remains largely unchanged. So, the rate cut may be delayed until mid-year,” said Peter Grant, a senior strategist at Zaner Metals.
Following the Fed meeting, the futures market indicated that traders leaned towards the possibility of the Fed keeping rates unchanged until June.
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