Image Source: Pixabay
 

Gold price (XAU/USD) rises to near a fresh record high around $5,160 during the early Asian session on Wednesday. The precious metal extends its upside amid a weaker US Dollar (USD), ongoing geopolitical tensions and economic uncertainty. Traders brace for the Federal Reserve (Fed) interest rate decision later on Wednesday for fresh impetus. 

US President Donald Trump said on Tuesday that the value of the USD is great when asked whether he thought it had declined too much. His remarks dragged the US Dollar Index (DXY) lower to its lowest level since February 2022. This, in turn, provides some support to the USD-denominated commodity price, such as Gold. 

Additionally, traders seek protection against global instability and trade war threats, boosting the safe-haven demand. Earlier in January, Trump had threatened to take control of Greenland, slap more tariffs on European nations, move to criminally indict Fed Chair Jerome Powell, and oversee an operation to seize the president of Venezuela. On Saturday, he threatened to impose 100% tariffs on Canadian goods if the country were to strike a trade deal with China. 

The US central bank is widely anticipated to keep the federal funds rate in its current range of 3.50% to 3.75%. The pause would come after the Fed lowered its benchmark rate at three consecutive meetings late last year. Traders will closely watch Fed Chair Jerome Powell’s remarks at the press conference for more cues regarding future monetary policy. Any hawkish comments from Fed officials could help limit the USD’s losses and weigh on the Gold price in the near term. 

More By This Author: