Market Analysis

Gold Surges to New Peak Following Fed's Rate Cut Forecast for 2025

Amos Simanungkalit · 20 Mar684.8K Views

Image Credit: TheStar

Gold prices reached an all-time high on Thursday, driven by the U.S. Federal Reserve's signals of potential interest rate cuts this year, boosting gold's appeal amid ongoing geopolitical and economic uncertainties.

Spot gold remained steady at $3,047.1 an ounce as of 0700 GMT, after hitting a peak of $3,057.21 earlier. U.S. gold futures also gained 0.4%, reaching $3,054.10.

The surge in gold is attributed to a combination of market uncertainties, geopolitical tensions, a weaker U.S. dollar, and expectations that interest rates will be lowered later this year, according to Dick Poon, general manager at Heraeus Metals Hong Kong Ltd.

On Wednesday, the Federal Reserve left its benchmark rate unchanged at 4.25%-4.50% but indicated it expects two quarter-percentage-point rate cuts by the end of 2025. As gold is a non-yielding asset, it tends to benefit in low interest rate environments.

U.S. President Donald Trump's trade policies, including tariffs, have contributed to slower economic growth and higher inflation, according to Fed Chair Jerome Powell. The uncertainty over tariffs, along with the potential for rate cuts and escalating geopolitical tensions, has further fueled gold's rally, which has seen 16 record highs in 2025, including four above the $3,000 mark.

Gold's status as a safe-haven asset and inflation hedge has gained strength amid ongoing Middle East tensions, with Israel resuming airstrikes on Gaza, killing 37 Palestinians on Thursday.

OCBC forex strategist Christopher Wong noted that gold’s appeal remains solid due to these geopolitical concerns and tariff uncertainties, maintaining a positive outlook for the precious metal. However, ABC Refinery’s Nicholas Frappell suggested that a correction could be possible, though previous corrections have been brief and quickly bought into. He pointed out that resistance might emerge around the $3,090-$3,100 range.

Meanwhile, other precious metals showed mixed performance, with spot silver holding steady at $33.8 an ounce, platinum dropping 0.3% to $989.85, and palladium slipping 1% to $949.50.