Spot gold hits record high amid Middle East tensions, fed decision anticipation

March 19, 2025 (MLN): Gold prices rose to hit a record high on Wednesday, as tensions in the Middle East and trade uncertainties lifted the bullion's safe-haven appeal, while traders awaited the Federal Reserve's decision due later in the day.

Spot gold was up 1.29% at $3,036.78 an ounce, as of [11:38 am], after hitting an all-time peak of $3,042.95 earlier in the session.

U.S. gold futures gained 0.3% to $3,048.70.

"Traders are viewing gold as an asset, which is well-equipped to handle tariff-related economic uncertainty," KCM Trade chief market analyst Tim Waterer said, adding that the current trading environment, where there is instability, is playing to gold's strengths as an uncertainty hedge.

Investors are worried about an economic slowdown and elevated risks of recession due to U.S. President Donald Trump's tariffs, which are widely considered likely to stoke inflation, according to Reuters.

The tariffs have flared up trade tensions and include a flat 25% levy on steel and aluminium, which came into effect in February, and reciprocal and sectoral tariffs to be imposed on April 2.

The Fed, which will conclude its two-day policy meeting later in the day, is expected to hold its benchmark interest rate steady in the 4.25%-4.50% range.

Non-yielding gold, a hedge against geopolitical and economic uncertainties, thrives in a low-interest rate environment, Reuters added.

"If the FOMC meeting takes on a dovish tone in response to growing uncertainty over how tariffs may impact growth, this could provide a further assist to the gold price, could be a green light for gold to make a push above $3,050," Waterer said.

Markets also await Fed chair Powell's speech at 1830 GMT to pick up further clues on the policy outlook.

Spot silver firmed 0.1% to $34.05 an ounce, platinum lost 0.4% to $993.45 and palladium added 0.1% to $968.20.

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