Gold Holds as Traders Weigh Inflation Warning, Middle East Risks

(Bloomberg) — Gold traded little changed as investors weighed rising geopolitical risks in the Middle East against an inflation warning from the Federal Reserve that raises the possibility of fewer US rate cuts.

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Bullion hovered near $3,369 an ounce as trading wound down in London, with activity muted because US markets are closed for a public holiday.

The Fed left rates unchanged Wednesday, and policymakers penciled in two cuts by year’s end. But Chair Jerome Powell said the central bank’s market committee continued to expect tariffs to work their way into price gains.

Fed policymakers also released new economic forecasts — their first since President Donald Trump’s tariff spree in April — showing they expect weaker growth, higher inflation and lower employment in 2025. A significant rise in consumer prices may curtail monetary easing, which would be a negative for gold as it doesn’t pay interest.

That offset support for bullion from war fears in the Middle East, with some US officials said to be preparing for the possibility of a strike on Iran in the coming days. The geopolitical tensions and economic uncertainty have combined with robust buying from central banks and inflows to exchange-traded funds to push gold almost 30% higher this year.

Spot gold was little changed as of 5:36 p.m. in London. The Bloomberg Dollar Spot Index added 0.2%. Silver fell 1% but remained near the highest since 2012, while palladium also slipped.

Platinum dropped 2.2%, reversing an earlier jump that saw it reach the highest level in more than a decade. Gains in the metal have been underpinned by a spike in demand and an ongoing market deficit.

“Gold is currently hovering near record highs, which makes further investment vulnerable to changing macroeconomics,” said Priyanka Sachdeva, an analyst at Phillip Nova Pte Ltd. “That’s probably why we are seeing safe-haven flows being redirected to platinum and silver.”