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• Gold bids jump after Fed releases latest rate call and dot plot.
• Growth expectations in 2025 are getting hampered by lopsided US policy calls.
• Markets await Fed Chair Powell's latest press conference.

On Wednesday, Gold surged, reaching $3,040 during intraday trading as the Federal Reserve (Fed) made its latest interest rate decision, keeping rates unchanged at 4.5%. While markets generally anticipated this hold, any modifications to the Fed's outlook could unsettle investors who are awaiting comments from Fed Chair Jerome Powell.

The Fed noted that growth projections for 2025 have been significantly hindered by the Trump administration's erratic policy of announcing trade tariffs on social media only to later retract them. As a result, the Federal Open Market Committee (FOMC) revised its end-2025 Gross Domestic Product (GDP) forecast to 1.7%, a sharp decline from the 2.1% estimate shared in December.

Additionally, the median dot plot suggests the end-2025 interest rate will remain at 3.9%, showing little change since the last policy meeting. The FOMC plans to slow down its balance sheet runoff starting in April. Rate markets still indicate a greater than 50% chance of a quarter-point rate cut in June, with most rate traders pricing in 65% odds of a quarter-point or higher rate cut on June 18

Despite rising risks to the US economy via lagging growth metrics and growing concerns that the US' haphazard tariff policy could kick off both fresh inflation and an economic recession at the same time, Fed Chair Jerome Powell noted on Wednesday that the current economic outlook still remains overall healthy, and the Fed is in no rush to shift away from its expectations of at least two more rate cuts later in the year.

This policy outlook matches the aggregate score of Fed policymaker speeches, scored by FXStreet's internal Fed Sentiment Index, which shows Fed speakers have been vocal in pointing out the growing risks and concerns looming over the US economy, however the aggregate view remains pinned slightly to the dovish side, but close to neutral as the Fed awaits clearer data direction.

XAU/USD daily chart

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