Gold Rally Doesn’t Lose Bullish Momentum
The gold (XAU/USD) price gained 0.44% on Wednesday, fuelled by the prospect of Federal Reserve (Fed) rate cuts and safe-haven buying due to trade tariffs uncertainty and geopolitical instability.
As expected, the Fed held its benchmark unchanged in the 4.25–4.5% range. However, Fed policymakers still expect the central bank to deliver two 0.25 percentage points cuts by this year’s end, matching their December projection. Jerome Powell, Fed Chairman, stated that the Trump administration’s early policies, particularly import tariffs, seem to have contributed to slower US economic growth and a temporary rise in inflation.
A confluence of factors—tariff uncertainties, the prospect of rate reductions, global central bank gold demand, and renewed tensions in the Middle East—has propelled gold to an extraordinary rally, resulting in 16 record highs in 2025, four exceeding $3,000. Still, traders should watch out for possible unexpected downward corrections.
"Given the very good performance in gold through Q1, I think a correction is not out of the question. However, so far, corrections have been relatively short-lived and well bid... $3,090–$3,100 may see some resistance", said Nicholas Frappell, global head of institutional markets at ABC Refinery.
XAU/USD rose during the Asian and early European trading sessions. Today, more interest rate decisions are coming up. Swiss National Bank (SNB) and the Bank of England (BoE) will announce their base rates at 8:30 a.m. UTC and 12:00 p.m. UTC. In addition, the US Jobless Claims report will come out at 12:30 p.m. UTC. Lower-than-expected figures could pause the rally in XAU/USD, but such a setback will likely be short-lived. Conversely, higher-than-expected results may pull XAU/USD higher towards the $3,083.
Euro Fails to Rise Even as US Dollar Weakens
The euro (EUR/USD) lost 0.38% against the US dollar (USD) on Wednesday, even as the greenback failed to rally due to the Federal Reserve’s (Fed) dovish message. As expected, the Fed held interest rates steady but indicated that policymakers anticipate reducing borrowing costs by 0.5 percentage points by the end of this year.
The US Dollar Index (DXY) weakened after the decision but generally remained positive on the day. Fed officials revised their 2025 inflation forecast upward in response to the Donald Trump administration’s tariffs. They now expect inflation to reach 2.7%, exceeding the 2.5% projection from December and surpassing the 2% target. This US inflation outlook supported the greenback and pressured EUR/USD, which has been moving predominantly range-bound for several days.
"I think that we’re probably going to be kind of floating around here until we get some firm first-quarter GDP data that’s going to be a really big tell for traders as to whether this economic weakness that everyone’s worried about, it’s fully materialising", said Helen Given, director of trading at Monex USA.
Meanwhile, the Eurostat statement showed that inflation in the eurozone was 2.3% in February. The figure is below the previously reported 2.4% and aligns with earlier economist estimates. However, core inflation—an indicator closely watched by policymakers, which excludes volatile food and energy costs—remained at 2.6%. It held steady even after the monthly growth rate was cut from 0.6% towards 0.5%. While the revision is significant, it’s not expected to substantially alter expectations for the European Central Bank’s (ECB) April policy meeting.
EUR/USD fell slightly during the Asian and early European trading sessions. Today, the Swiss National Bank (SNB) and the Bank of England (BOE) will announce their policy rate decisions at 8:30 a.m. UTC and 12:00 p.m. UTC. The announcements may add some volatility to EUR pairs. In addition, the US Jobless Claims report is due at 12:30 p.m. UTC. Lower-than-expected figures could push EUR/USD below 1.08750. Conversely, higher-than-expected results may pull EUR/USD towards 1.09460. Also, traders should note that several ECB policymakers, including ECB President Christine Lagarde, will give speeches later today. Their remarks, particularly regarding the current economic outlook and potential policy adjustments, might offer clues about the central bank’s upcoming decisions.
Weak Employment Report Pushes AUD Down
The Australian dollar (AUD/USD) weakened against the US dollar on Wednesday but later recovered and finished the day essentially unchanged.
Earlier today, AUD/USD started to fall again after the Australian Bureau of Statistics released a surprisingly weak Employment report. Figures showed net employment fell by 52,800 in February from January compared with the expected 30,000 rise. Annual job growth pulled back sharply from 3.5% to just 1.9%. Still, figures remain in line with long-running averages. After hitting a record high of 67.2% in January, the participation rate slumped towards 66.8%. However, the unemployment rate stayed at 4.1%, matching market expectations.
Interest rate swaps market data still implies only a small 10% chance of a rate cut by the Reserve Bank of Australia (RBA) at the April 1 meeting. Meanwhile, the chances of a rate reduction in May have risen from 70% towards 78%. The RBA cut interest rates last month for the first time in four years but cautioned that further easing isn’t guaranteed, given the surprisingly strong labour market could risk stoking inflation. Now, the labour market no longer looks strong, so investors expect the RBA to turn dovish again. These expectations put downward pressure on AUD/USD.
AUD/USD dropped below the important 100-day moving average during the Asian and early European trading sessions. Today, the focus is on two central banks’ decisions and US macro data. The Swiss National Bank (SNB) and the Bank of England (BOE) will announce their policy rate decisions at 8:30 a.m. UTC and 12:00 p.m. UTC, respectively. Also, the US Jobless Claims report will come out at 12:30 p.m. UTC. Lower-than-expected figures could push AUD/USD towards 0.63000. Conversely, higher-than-expected results may pull the pair above 0.63500.