ING’s commodities team, led by Warren Patterson and Ewa Manthey, reports that Gold came under pressure after Federal Reserve Chair Kevin Warsh reinforced a higher-for-longer rates narrative, supporting the Dollar. They add that upcoming US inflation and labour data, central bank buying and geopolitics will shape Gold’s near-term performance, with upside seen as constrained by rate expectations.

Dollar strength weighs on bullion

“Gold came under pressure on Friday after Federal Reserve Chair Kevin Warsh signalled that policymakers remain focused on returning inflation to the 2% target. This dampens expectations for an imminent easing in monetary policy. The comments supported the US dollar and weighed on gold prices.”

“Warsh stressed that inflation progress remains insufficient and reiterated that interest rates remain the Fed’s primary tool for achieving its objectives. Markets interpreted the remarks as reinforcing a higher-for-longer rates outlook, which tends to weigh on non-yielding assets such as gold.”

“Gold is likely to remain sensitive to incoming US inflation and labour market data. While central bank buying and geopolitical risks should continue to provide underlying support, a stronger dollar and higher-for-longer rate expectations could limit near-term upside momentum.”