Gold consolidates as investors weigh US tariffs, Iran talks and Fed outlook
LONDON (February 25) Gold (XAU/USD) struggles for direction on Wednesday, easing slightly after trimming part of the previous day’s losses. Although the downside appears limited, as fresh uncertainty over US trade policy and lingering geopolitical tensions in the Middle East continue to underpin safe-haven demand.
At the time of writing, XAU/USD trades near $5,171, after briefly climbing above the $5,200 level earlier in the European trading session. A broadly steady US Dollar (USD), alongwith a modest recovery in global equity markets, is limiting follow-through buying in Bullion.
Global trade jitters and US-Iran talks keep markets on edge
Global trade tensions resurfaced after US President Donald Trump announced a 10% tariff on imports from all countries, seeking to preserve tariff measures following the US Supreme Court’s ruling against the use of the International Emergency Economic Powers Act (IEEPA).
Market sentiment also remains cautious ahead of high-level US-Iran nuclear talks scheduled in Geneva on Thursday. Investors remain wary of a potential military escalation, given the significant presence of US armed forces in the region, if the talks fail to deliver a meaningful breakthrough.
Earlier in the day, US President Trump said during his State of the Union address that his preference is to resolve the Iran nuclear issue through diplomacy. Meanwhile, Iran’s Deputy Foreign Minister Abbas Araghchi said on Tuesday that Tehran is ready to take the necessary steps to reach an agreement with the US.
Traders reassess Fed easing path
Investors have scaled back expectations for near-term Federal Reserve (Fed) interest rate cuts as policymakers continue to flag concerns over persistent inflation pressure. Chicago Fed President Austan Goolsbee said on Tuesday that he is cautious about front-loading rate cuts without clear evidence that inflation is moving sustainably back toward the 2% target.
Boston Fed President Susan Collins said that interest rates were likely to stay unchanged “for some time” and that she was looking for more confidence that disinflation resumes.
This shift is likely supporting the US Dollar’s resilience, which in turn is acting as a headwind for the non-yielding metal, as Gold typically performs better in a lower interest rate environment.
Looking ahead, in the absence of major US data releases, traders will focus on Fed signals and geopolitical news for short-term direction in Gold.
FXStreet
