Gold prices registered minimal gains after the U.S. Fed announced its decision to retain the existing interest rate on Wednesday. The Fed also revealed that two reductions in the interest rate are on the cards during the remaining months of the year.
Gold fell sharply after President Trump had earlier commented that he was open to hosting Iran at the White House if the Middle East country decided to conduct negotiations. These comments caused gold prices to slide because they indicated that there was a possibility of deescalating the conflict between Iran and Israel in the foreseeable future.
Gold had risen when the conflict broke out a week ago and the absence of signs that it would end soon raised geopolitical risks, which drove investors to gold as a safe haven to safeguard their portfolios.
During the FOMC meeting on Wednesday, Jerome Powell, the Fed Chair, expressed his confidence in the current monetary policy. He said it was sufficient to address the existing external shocks, such as geopolitical risks and tariffs. He added that the country’s economy was continuing to expand at a good pace and conditions within the labor market were still strong.
More specifically, FOMC made a slight reduction to GDP growth projections for this year from the earlier 1.7% outlook provided in March to a slightly lower growth rate of 1.4%. The projection for 2025’s overall unemployment rate was also revised to 4.5% from the forecast of 4.4%, which had been provided in March. PCE inflation expectations for the year were also adjusted from 2.8% to 3.1%. Overall, the revisions to the projections for different economic indicators were modest and don’t significantly alter the outlook for the U.S. economy.
Meanwhile, data on the housing sector revealed a degree of cooling. There was a nearly 10% month over month drop in the number of starts to housing unit constructions while the number of building permits applied for also had a 2% drop on a MoM basis.
The yields on U.S. Treasuries also continued their downward momentum. For example, the 10-year bond shed two basis points as real yields on these Treasuries also lost approximately 5 bps.
Overall, investors will be keeping an eye on developments in the Middle East, especially the conflict between Israel and Iran. The tariff situation is also still on their radar. Any changes, whether they have a positive or negative effect on the economy, will serve as the next driver of markets. Gold is sensitive to these macro factors and its price could move rapidly in either direction.
As things stand, current market conditions bode well for gold, and there is a strong chance that entities like Torr Metals Inc. (TSX.V: TMET) in the gold industry could see investment inflows ticking upwards.
NOTE TO INVESTORS: The latest news and updates relating to Torr Metals Inc. (TSX.V: TMET) are available in the company’s newsroom at https://ibn.fm/TMET
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