Gold Hits Record High as Fed Holds Rates Steady

Gold surged to a record $3,038 per ounce as markets priced in no chance of a Fed rate cut today, with a 65% probability for June. US stocks fell, snapping a two-session winning streak, while the S&P 500 is down about 7% since January. Meanwhile, geopolitical tensions remain high with Israeli airstrikes in Gaza and Trump securing Putin’s agreement to halt attacks on Ukraine’s energy facilities.

Equities

The FTSE 100 rose 0.3%, marking its fifth consecutive day of gains, supported by banks and mining stocks ahead of the Bank of England’s rate decision later this week. The banks index climbed 2.2%, with HSBC gaining nearly 2%, contributing significantly to the index’s positive performance.

Mining stocks also performed well as gold hit a record high above $3,000 per ounce, driven by concerns over US trade policy and Middle East tensions. Bytes Technology surged 18% following strong full-year results, reporting double-digit growth in operating profit. Computacenter also jumped 11%, reaching a six-month high, as management cited a strong order backlog and positive outlook for 2025.

On Wall Street, stocks fell, snapping a two-session winning streak as investors awaited the Federal Reserve’s monetary policy decision. The S&P 500 declined 1.07%, while the Nasdaq dropped 1.71% and the Dow Jones Industrial Average slipped 0.62%.

Nvidia fell 3.35% as its annual software developer conference began, with CEO Jensen Huang highlighting a shift in the AI industry towards more detailed responses rather than model training. Tesla dropped 5.34% after RBC slashed its price target from $320 to $120, citing lower expectations for its self-driving technology and robotaxi market share. The stock is now down nearly 45% this year.

Alphabet declined 2.2% following its announcement of a $32 billion acquisition of cybersecurity firm Wiz, the largest deal in the company’s history. Investors moved towards safe-haven assets, pushing gold to record highs. The market also reacted to US import prices rising unexpectedly in February, adding to inflation concerns. Meanwhile, Trump and Putin agreed to a limited 30-day ceasefire targeting Ukraine’s energy infrastructure, though broader peace negotiations have yet to progress.

The FTSE 250 also climbed 0.4%, tracking gains in the broader market. Investors are now focused on the Bank of England’s decision on Thursday, with expectations that rates will remain unchanged, while attention remains on the Federal Reserve’s policy statement today and potential signals on rate cuts later in the year.

Forex & Commodities

The Japanese yen fell 0.2% to 149.56 per dollar after the Bank of Japan left interest rates unchanged at 0.5%, as expected. The timing of the announcement initially led to speculation that the bank was not considering an earlier rate hike. Governor Kazuo Ueda is expected to confirm a gradual approach to raising rates at his post-meeting briefing.

The US dollar edged up 0.1% to 103.39 against a basket of currencies but remains near a five-month low as traders await the Federal Reserve’s policy decision later today. Markets are pricing in 60 basis points of Fed rate cuts by the end of the year. The euro held near a five-month high of $1.0930, buoyed by optimism over Germany’s fiscal reforms, which could support economic growth and increased military spending. Sterling slipped 0.12% to $1.2988, slightly below its four-month high of $1.3010.

Gold rose 0.2% to $3,041.37 per ounce, reaching a record high of $3,042.95 earlier in the session, as investors sought safe-haven assets amid Middle East tensions and trade concerns. If the Fed signals a dovish stance, gold prices could push past $3,050.

Oil prices fell after Russia agreed to halt attacks on Ukraine’s energy infrastructure, raising the prospect of more Russian crude entering global markets. Brent crude slipped 0.3% to $70.33 per barrel, while US West Texas Intermediate (WTI) crude declined 0.4% to $66.65. US crude inventories rose 4.59 million barrels, while fuel stockpiles declined.