Gold Price Forecast: XAU/USD drifts higher to near $3,750 amid rate cut bets, geopolitical risks
Gold price gains ground to near $3,750 in Thursday’s early Asian session.
Geopolitical tensions and uncertainty boost the safe-haven flows.
Fed Powell's cautious remarks on potential interest rate cuts might cap the Gold’s upside.
The Gold price (XAU/USD) trades in positive territory around $3,750 during the early Asian session on Thursday. The precious metal edges higher amid expectations of further US rate cuts from the Federal Reserve (Fed) this year and persistent geopolitical risks.
The Fed cut its benchmark interest rate by 25 basis points (bps) at its September meeting, bringing the Federal Funds Rate to a target range of 4.00% to 4.25%. A Summary of Economic Projections (SEP), or ‘dot-plot’, showed that the median Fed policymakers expect two more rate reductions before the end of 2025, and one more in 2026. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.
Furthermore, geopolitical uncertainty boosted demand for safe-haven assets like Gold. NATO warned Russia on Tuesday that it would use "all necessary military and non-military tools" to defend itself as it condemned Moscow for violating Estonian airspace in "a pattern of increasingly irresponsible behaviour”.
On the other hand, cautious remarks from Fed Chair Jerome Powell about the timing of the next cut in US interest rates might cap the upside for the yellow metal. Powell said on Tuesday that the US central bank would continue to balance concerns over labour market weakness with worries about inflation, while Fed officials took stances on both sides of the monetary policy path divide.
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