Spot Gold extended a pullback from recent 2-week high of $3,435 per troy ounce on Thursday, after reports stated the US was expected to announce a trade deal with Britain today, while the Federal Reserve kept borrowing costs on hold.
Market players also awaited the outcome of the US-China trade negotiations in Switzerland this weekend.
“On trade deal front, any de-escalation of trade war and diminishing uncertain atmosphere would be negative for the yellow metal. If the U.S. announces trade deal with the UK would be positive for the overall global economy,” Jigar Trivedi, senior commodity analyst at Reliance Securities, was quoted as saying by Reuters.
In the meantime, the Fed left its federal funds rate target range intact at 4.25%-4.50% for a third straight meeting in May, in line with market consensus.
The US central bank has adopted a wait-and-see approach amid concerns that the tariffs could push inflation higher and slow GDP growth.
“The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen,” the FOMC said in a policy statement.
At the press conference after the FOMC meeting, Fed Chair Jerome Powell noted it was too early to determine whether inflation or unemployment would emerge as the bigger concern and the central bank did not have to rush into adjusting interest rates.
Yet, “despite heightened uncertainty, the economy is still in a solid position,” Powell remarked.
He also said the Fed’s policy would have to be flexible. According to Powell, “the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments.”
Spot Gold was last down 0.67% on the day to trade at $3,341.69 per troy ounce.
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