Gold climbed on Thursday after the Federal Reserve warned of rising inflation and labor market risks fuelling economic uncertainty, while investors awaited the outcome of the U.S.-China trade talks this weekend.
Spot gold rose 1.4% to $3,409.76 an ounce, as of 0223 GMT. U.S. gold futures firmed 0.7% to $3,416.70.
“I think it’s mostly a little drop in front-end yields post Fed, the “wait and see” language was good enough for now and the hotter rhetoric from Trump about trade negotiations with China,” Capital.com’s financial market analyst Kyle Rodda said.
“It taps into two key themes which are slower US growth and de-Dollarisation.”
The Fed held interest rates steady on Wednesday, but said risks of higher inflation and unemployment had risen, further clouding the U.S. economic outlook, as its policymakers grapple with the impact of President Donald Trump’s tariffs.
Fed Chair Jerome Powell said it isn’t clear if the economy will continue its steady growth or wilt under mounting uncertainty and a possible spike in inflation. Traders are expecting rate cuts of 77 basis points this year, starting September.
On Wednesday, Trump suggested China initiated the upcoming senior-level trade talks between the two countries and said he was not willing to cut import tariffs on Chinese goods to get Beijing to the negotiating table.
U.S. and Chinese officials are due to hold talks in Switzerland this weekend.
The non-yielding bullion, a safeguard against political and financial turmoils, thrives in a low-interest-rate environment.
India struck Pakistan and Pakistani Kashmir on Wednesday over the tourist killings in Kashmir last month. Pakistan vowed to retaliate and said it shot down five Indian aircraft in the worst clash in more than two decades between the nuclear-armed neighbours.
Spot silver rose 1.1% to $32.82 an ounce, platinum gained 0.8% to $982.05 and palladium was steady at $971.95.
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