The Fed Holds Interest Rates, Gold Still Has Potential for Strengthened Due to Trump

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Update: Thursday, 30/01/2025 - 12:50 PM
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The announcement of the Federal Reserve’s monetary policy on Wednesday caused significant volatility in the financial markets. The Fed decided to maintain its benchmark interest rate at 4.25% – 4.5% and indicated that it would evaluate further data before making any decisions regarding potential rate cuts in the future.

Moreover, in its release, the Fed also omitted the phrase “inflation approaching the 2% target,” signaling that there may be a risk of inflation accelerating again. This suggests that the Fed is unlikely to lower interest rates in the near term.

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This sentiment is expected to continue influencing market movements during trading on Thursday (January 30, 2025) in Europe, alongside several key economic data releases. Below are key indicators from Trading Central:

  • Germany’s economic growth (Gross Domestic Product/GDP) at 16:00 WIB (year-on-year/Q42024); forecast 0.1% compared to the previous -0.3%.
  • Eurozone’s economic growth (Gross Domestic Product/GDP) at 17:00 WIB (year-on-year/Q42024); forecast 0.3% versus the previous 0.4%.

GOLD
Gold prices (XAUUSD) experienced a decline during Wednesday’s trading in response to the Fed’s monetary policy announcement. However, shortly after, Gold trimmed its losses and concluded trading at $2,759.59 per troy ounce, down only $3.25.

Despite the negative sentiment triggered by the Fed’s announcement, uncertainties about the future are allowing Gold to rebound. Additionally, U.S. President Donald Trump has renewed pressure on the Fed to lower interest rates.

Market participants are also awaiting potential policy decisions from President Trump, especially concerning planned tariffs on imports from Canada and Mexico, set to be announced on February 1.

These factors have resulted in volatile movements for Gold, benefiting from increased demand for safe haven assets. This sentiment is expected to continue influencing Gold prices during the European session.


OIL
Oil prices (CLS10) fell nearly $1 during trading on Wednesday, settling at $72.99 per barrel, reaching their lowest level since early January. Oil faced pressure following a report from the Energy Information Administration (EIA) indicating a significant rise in oil and gasoline stocks in the United States over the past week.

This has resulted in a negative sentiment for oil, which is expected to persist during European trading.


EURUSD
EURUSD experienced volatility before finishing Wednesday’s trading with a slight decline at 1.04198. In addition to the Fed’s monetary policy announcement, attention is also directed towards the European Central Bank’s (ECB) interest rate announcement later in the evening.

However, prior to that announcement, the release of GDP data from Germany and the eurozone is anticipated to impact movements considerably. Stronger-than-expected data could provide a positive sentiment towards EURUSD.


GBPUSD
Similar to EURUSD, this currency pair experienced volatility before managing to post a marginal rise to 1.24501 during Wednesday’s trading. The market perceives that the Fed may reduce interest rates twice this year, which puts pressure on the U.S. dollar and creates positive sentiment for GBPUSD.


USDJPY
USDJPY fell 275 points (27.5 pips) to 155.245 during Wednesday’s trading and continued to plummet an additional 96.5 pips to 154.280 by midday. This movement indicates that the U.S. dollar is still not benefitting from the Fed’s hawkish stance. Markets are still considering the possibility of two rate cuts by the Fed, especially as Trump continues to exert pressure by indicating intentions to tackle inflation.

This sentiment will likely exert further pressure on USDJPY during the European trading session.


Nasdaq
The Nasdaq index showed considerable volatility before recording a slight increase to 21,572. As of midday, the Nasdaq has risen 107 index points to 21,679. The release of earnings reports from several giant tech firms attracted attention, following the turmoil caused by DeepSeek.

Meta Platform reported better-than-expected earnings, boosting Facebook’s parent stock and subsequently enhancing Nasdaq’s performance. This sentiment is expected to continue impacting Nasdaq movements during the European session.


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