Gold slipped to around $4,960 per ounce on Thursday, Feb 19, trading in a choppy range after retreating from its late-January record highs as markets digested the latest Federal Open Market Committee (FOMC) minutes.
Fed minutes cool rate-cut optimism
The January meeting notes revealed a split among Federal Reserve officials. While some policymakers indicated that rate cuts could resume later this year if inflation continues to ease, others preferred to pause further easing for now. A few even flagged the possibility of rate hikes and called for a more balanced, two-sided outlook in official communication.
Following the release, traders scaled back expectations for multiple rate cuts in 2026. A more cautious policy path typically weighs on non-yielding assets like gold, especially when accompanied by firm economic data.
Focus shifts to GDP and PCE data
Investor attention is now turning to upcoming US GDP and core PCE inflation data, which could offer clearer direction on the interest-rate trajectory. Stronger-than-expected numbers may reinforce the case for keeping rates higher for longer, putting further pressure on bullion.
Seasonal and liquidity factors
Short-term demand has also been softer due to the Lunar New Year holiday in China, leading to thinner liquidity and reduced physical buying interest across Asia.
Geopolitical risks resurface
At the same time, geopolitical concerns around Iran have resurfaced, with reports suggesting that any potential US military action could evolve into a prolonged campaign following inconclusive talks. While such risks generally support safe-haven demand, the immediate impact has been overshadowed by shifting rate expectations and a stronger dollar environment.
Overall, gold’s pullback reflects a recalibration of rate-cut bets and temporary demand softness, even as broader geopolitical uncertainties linger.