Gold price drifts lower amid postive risk tone; downside seems cushioned
Asian equity markets track the overnight gains on Wall Street, bolstered by the Federal Reserve's decision to keep interest rates unchanged and maintain its rate cut forecast for the year. As was widely expected, the US central bank held interest rates steady for the second straight meeting and signaled that it would deliver two 25 basis points rate cuts by the end of this year.
Adding to this, US President Donald Trump and Russian President Vladimir Putin agreed on Tuesday for an immediate pause in strikes against energy infrastructure in the Ukraine war. Moreover, Ukrainian President Volodymyr Zelenskiy and Trump also agreed to work together to end the protracted Russia-Ukraine war, which further boosted investors' confidence.
Meanwhile, Fed officials trimmed their growth forecast for the year amid the growing uncertainty over the impact of the Trump administration's aggressive trade policies on economic activity. Trump imposed a flat 25% duty on steel and aluminum since February and has threatened to impose reciprocal and sectoral tariffs, fueling worries about a global trade war.
Traders now look forward to the latest monetary policy updates from the Bank of England and the Swiss National Bank. Later during the North American session, the US economic docket – featuring the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Existing Home Sales data – could produce short-term opportunities around the XAU/USD.
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