Gold Prices Tread Water Ahead of Fed Rate Decision

Gold prices have remained stable at around $2,020 per ounce as investors weigh the possibility of further Federal Reserve interest rate hikes. The metal has been under pressure since February when stronger-than-expected U.S. jobs data dampened hopes for early rate cuts.

The Fed has maintained its benchmark rate at 5.25%-5.50% since July 2024, but recent statements from policymakers suggest that another hike cannot be ruled out if inflation proves sticky. According to the CME FedWatch tool, market pricing currently implies a 35% probability of a 25-basis-point hike at the March meeting, up from 20% a month ago.

Central bank buying and persistent geopolitical uncertainties are limiting downside risks for gold, but investors are less inclined to hold non-yielding assets due to elevated U.S. Treasury yields. The upcoming release of the U.S. Consumer Price Index (CPI) for January will be crucial in determining the direction of gold prices.