Gold Extends Gains Amid No-Change Fed Call

 

Gold Extends Gains; Cautious Fed Confirms No March Interest Rate Cut

(Bullion News Network) – Gold crossed yet another milestone today, jumping $3,050 per troy ounce as Federal Reserve Chair Jerome Powell explained the FOMC’s decision to leave interest rates unchanged at a press conference following the committee’s March meeting. The economist expressed a belief that data suggests the U.S. economy remains strong, although market uncertainty and high consumer prices are acute concerns for the Fed moving forward. Gold prices climbed immediately following the Fed’s no-change announcement and continued to extend these gains as Powell spoke to reporters in the post-decision press conference. 

The Fed’s no-cut call came as no surprise to markets, which had already priced in unchanged rates earlier this week. Given a better-than-expected February CPI and a relatively stable labor market, analysts anticipated that the Fed would be slow to pull the lever on another rate cut at this meeting. In the Fed’s post-decision statement, Mr. Powell reiterated the FOMC’s position that economic activity, the unemployment rate, and inflation data suggest that keeping rates unchanged is consistent with the Fed’s dual mandate of stabilizing prices and maximizing employment: 

Recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated. 

Uncertainty remains a major driver of the precious metals market. The Conference Board’s February Consumer Confidence Index found that consumer sentiment dropped sharply last month, reflecting growing concerns that President Trump’s tariffs could lead to higher prices. The FOMC acknowledged the heightened uncertainty in its statement released Wednesday afternoon: 

Uncertainty around the economic outlook has increased. The Committee is attentive to the risks on both sides of its dual mandate. 

The Fed’s decision to leave the federal interest rate unchanged at 4.25-4.50% falls solidly in line with market expectations, but the FOMC’s language reflects a growing sense of uncertainty that has underscored a volatile month of performances, both on Wall Street and in the precious metals market. Fears that President Trump’s tariffs and retaliatory tariffs from targeted countries will lead to higher prices for consumers have stimulated safe haven demand while erasing much of the “Trump bump” in the stock market. 

Tariffs were a major topic during Jerome Powell’s post-decision press conference. Chair Powell maintains that predicting the impacts of tariffs on consumer prices remains a significant priority for the Federal Open Market Committee, as is isolating which changes in the inflation rate are directly attributable to the White House’s tariffs. Retaliatory tariffs, Mr. Powell says, are already being calculated into the Fed’s inflation projections, since the committee anticipates that most countries hit with tariffs will respond by retaliating. 

Most notably, Powell said during Wednesday’s press conference that the tariffs may “delay progress” on lowering inflation as the FOMC targets its longstanding 2% inflation rate objective. Like in previous press conferences, Powell declined to comment on political questions, including one journalist’s query about whether President Trump poses a threat to the independence of the Federal Reserve as an institution. 

Wall Street rallied in the wake of the Fed’s decision. Despite the decision to note an uptick in uncertainty and the challenges to inflation progress posed by the White House’s tariffs, Powell emphasized that the Fed believes the economy of the United States remains in good shape. The Federal Reserve Chair also confirmed that the FOMC is still on track for two rate cuts in 2025, fueling the midday rally on Wall Street and providing a bit more ammunition for gold bulls hoping for a near-term reduction in the federal interest rate. 

JUST IN: 🇺🇸 Fed Chair Jerome Powell says inflation is rising partially due to President Trump’s tariffs. pic.twitter.com/BY67H2gli9

— Watcher.Guru (@WatcherGuru) March 19, 2025

Moving forward, the outlook for a rate cut at the Fed’s next meeting in May is notably stronger than market projections leading up to today’s FOMC decision. CME FedWatch finds an implied probability of 20.5% that the Fed will opt to cut rates by 25 basis points at that May meeting, a move that would likely be a boon for safe haven assets like gold and silver. Given that rate cut speculation was a primary market driver for gold during 2024’s historic run, movements in the probability of a rate reduction could directly impact the spot price of gold as markets await more news from the Federal Reserve. 

Initial jobless claims and U.S. leading economic indicators will headline the rest of this week for traders, with both reports becoming public tomorrow morning. Next week, a fresh consumer confidence report, initial jobless claims report, and the second GDP revision of 2025 will all be released. The major data set to look for next week will be the February PCE, which is one of the Fed’s preferred measures of inflation. This report should impact the likelihood that the Fed will cut rates in May. As Powell likes to say, however, the FOMC will review a wide range of key indicators leading up to that meeting before making a call. 

Gold ended the trading day Wednesday up $15 from Tuesday’s price. Gold set another all-time record on March 19th following the Federal Reserve’s decision to leave interest rates unchanged.