Gold prices (XAU/USD) moved sideways during Thursday’s Asian session, staying below the key $5,000 psychological level. Traders remain cautious as mixed signals from the market limit strong directional moves. The US Dollar continues to hold firm near a one-week high after the release of the January Federal Reserve meeting minutes, which leaned toward a more cautious stance on rate cuts. The stronger Dollar is weighing on the non-yielding precious metal.
The minutes revealed divisions among Federal Reserve officials regarding the timing of future rate reductions. Some policymakers indicated that additional cuts may be appropriate if inflation continues to ease. Others warned that reducing rates too quickly could jeopardize the central bank’s 2% inflation target.
Recent US economic data added to the cautious tone. Industrial Production rose more than expected in January, while manufacturing output recorded its strongest monthly increase in nearly a year. The stronger data supports the argument for keeping interest rates elevated for longer.
Following the release of the minutes and upbeat data, US Treasury yields climbed sharply, providing further support to the Dollar. However, financial markets are still pricing in the possibility of three quarter-point rate cuts later this year. Concerns surrounding potential political pressure on the Federal Reserve are limiting additional Dollar gains and offering some underlying support to Gold Price.
Geopolitical tensions are also preventing deeper losses in the precious metal. The latest round of US-mediated talks between Ukraine and Russia ended without significant progress, highlighting continued disagreements over disputed territories. Meanwhile, reports suggest the United States military is preparing contingency plans regarding Iran. Although no final decision has been announced, the possibility of escalating tensions is keeping safe-haven demand intact.
Investors now turn their attention to key US economic releases scheduled for Thursday, including Weekly Initial Jobless Claims, the Philadelphia Fed Manufacturing Index, and Pending Home Sales. Speeches from Federal Reserve officials may also influence short-term Dollar movement.
The main focus remains on Friday’s US Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred inflation measure. The data is expected to provide clearer guidance on the central bank’s policy path and could determine the next decisive move for both the US Dollar and Gold prices.
