Gold Pares Some Gains After Strong GDP

Gold rose toward $5,020 per ounce, extending its rally as investors digested a more cautious Federal Reserve stance alongside firmer US economic data and renewed geopolitical strain. Minutes from the January FOMC meeting showed most policymakers believe disinflation could take longer than previously anticipated, with some officials indicating rates may need to remain restrictive for longer or even rise again if inflation stabilizes above target, prompting markets to scale back expectations for multiple cuts this year. That reassessment followed resilient labour market signals, including jobless claims falling to 206,000, underscoring that underlying demand conditions remain solid. At the same time, escalating tensions between the US and Iran have lifted crude oil prices, reinforcing concerns about renewed input cost pressures and broadening gold’s appeal as a hedge against persistent inflation, even as physical demand in Asia remains seasonally subdued around the Lunar New Year period.

Gold rose toward $5,000 per ounce on Thursday, extending a 2% gain from the previous session as market attention shifted toward key US PCE inflation and GDP data due later this week for further cues on FOMC policy. Minutes from the January meeting showed Fed officials were divided, with some favoring a pause in further rate cuts for now, while easing could resume later in the year if inflation improves. Others raised the possibility of rate hikes and supported issuing a post-meeting statement reflecting a two-sided outlook for future policy rates. As a result, traders pared expectations for multiple rate cuts. Meanwhile, short-term demand for precious metals softened during China’s Lunar New Year holiday, as liquidity thinned and investor participation remained limited. Elsewhere, geopolitical risks surrounding Iran resurfaced, with reports suggesting any potential US military action could develop into a weeks-long campaign following inconclusive talks.

Gold traded above $4,990 per ounce on Wednesday, extending gains as investors digested the latest FOMC minutes and recalibrated expectations for US monetary policy. The FOMC minutes revealed a split between participants who would consider cuts if disinflation proceeds and others who favoured holding or tightening if inflation proved persistent. Fed Governor Michael Barr leaned toward keeping rates on hold for some time and Chicago Fed President Austan Goolsbee said cuts could be possible later if the data allow. Although the Fed left its benchmark rate unchanged at 3.5%–3.75% and signaled that progress toward the 2% target could be slower and more uneven, markets continue to price a data-dependent path that leaves room for easing later this year. That ambiguity has sustained gold’s appeal as a hedge against policy missteps and macro uncertainty, even as improved risk sentiment in equities and ongoing geopolitical negotiations temper the urgency of safe-haven flows.