Gold Bulls Lose Steam as Rate Cut Expectations Ris
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Posted On: 05/05/2025 5:15:00 PM
Gold Bulls Lose Steam as Rate Cut Expectations Rise
Rising expectations of a benchmark interest rate cut by the U.S. Federal Reserve are causing gold prices to fall. With numerous investors betting that the Fed would cut interest rates after the U.S. registered weaker-than-expected growth in the first quarter of 2025, spot gold and gold futures prices experienced some losses on Wednesday.
Spot gold prices fell by 0.2% to reach $3,308.32 per ounce, and U.S. gold futures dropped by 0.4% and settled at $3,319.10. Additionally, data shows that in Q1 2025, America’s gross domestic product contracted at an annualized rate of 0.3% as businesses in the country scrambled to import goods before the trade tariffs imposed by the Trump administration take effect.
The past several weeks have seen President Donald Trump impose a series of trade tariffs on dozens of countries across the globe, threatening to spark a trade war between the world’s largest economies. America’s ongoing tariff conflict with China is especially troubling as a very large portion of U.S. businesses source their raw materials and products from the Chinese market.
Many of these enterprises are racing to import as many products as they can from China before the Trump administration makes importing Chinese-made goods too expensive.
On the upside, experts believe that even though spot gold prices registered a minor decline this week, they are on track to support the previous month’s prices for the fourth month in a row. According to independent metals trader Tai Wong, the gold market remains bullish, and the recent data indicates a less complicated path to Fed interest rate cuts, which should have a positive effect on gold.
The trader notes that with gold prices recently hitting a record $3,500, the precious metal may trade sideways for a while. In the meantime, traders are betting on the Federal Reserve cutting interest rates by a full percentage point through the rest of the year if there are clearer signs of a slowdown in the economy by June.
Since interest rates and gold typically have an inverse relationship, falling interest rates will most likely result in higher gold prices. Non-yielding gold bullion, which was trading at a record $3,500.05 per ounce on April 22, will also benefit from low interest rates.
Traders are now waiting for the U.S. employment report for April to see how the Federal Reserve will move forward with benchmark interest rate cuts. While gold prices dipped slightly this week, the broader outlook remains positive as potential Fed rate cuts, economic uncertainty, and geopolitical tensions continue to support long-term investor interest in gold.
This positive outlook for gold is bound to make many gold mining entities like GEMXX Corp. (OTC: GEMZ) more attractive to investors looking to put their money in stocks with a high chance of weathering the current turbulent economic conditions.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
Please see full terms of use and disclaimers on the TinyGems website applicable to all content provided by TinyGems, wherever published or re-published: https://www.TinyGems.net/Disclaimer
Rising expectations of a benchmark interest rate cut by the U.S. Federal Reserve are causing gold prices to fall. With numerous investors betting that the Fed would cut interest rates after the U.S. registered weaker-than-expected growth in the first quarter of 2025, spot gold and gold futures prices experienced some losses on Wednesday.
Spot gold prices fell by 0.2% to reach $3,308.32 per ounce, and U.S. gold futures dropped by 0.4% and settled at $3,319.10. Additionally, data shows that in Q1 2025, America’s gross domestic product contracted at an annualized rate of 0.3% as businesses in the country scrambled to import goods before the trade tariffs imposed by the Trump administration take effect.
The past several weeks have seen President Donald Trump impose a series of trade tariffs on dozens of countries across the globe, threatening to spark a trade war between the world’s largest economies. America’s ongoing tariff conflict with China is especially troubling as a very large portion of U.S. businesses source their raw materials and products from the Chinese market.
Many of these enterprises are racing to import as many products as they can from China before the Trump administration makes importing Chinese-made goods too expensive.
On the upside, experts believe that even though spot gold prices registered a minor decline this week, they are on track to support the previous month’s prices for the fourth month in a row. According to independent metals trader Tai Wong, the gold market remains bullish, and the recent data indicates a less complicated path to Fed interest rate cuts, which should have a positive effect on gold.
The trader notes that with gold prices recently hitting a record $3,500, the precious metal may trade sideways for a while. In the meantime, traders are betting on the Federal Reserve cutting interest rates by a full percentage point through the rest of the year if there are clearer signs of a slowdown in the economy by June.
Since interest rates and gold typically have an inverse relationship, falling interest rates will most likely result in higher gold prices. Non-yielding gold bullion, which was trading at a record $3,500.05 per ounce on April 22, will also benefit from low interest rates.
Traders are now waiting for the U.S. employment report for April to see how the Federal Reserve will move forward with benchmark interest rate cuts. While gold prices dipped slightly this week, the broader outlook remains positive as potential Fed rate cuts, economic uncertainty, and geopolitical tensions continue to support long-term investor interest in gold.
This positive outlook for gold is bound to make many gold mining entities like GEMXX Corp. (OTC: GEMZ) more attractive to investors looking to put their money in stocks with a high chance of weathering the current turbulent economic conditions.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
Please see full terms of use and disclaimers on the TinyGems website applicable to all content provided by TinyGems, wherever published or re-published: https://www.TinyGems.net/Disclaimer
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