This year, in the early hours of tomorrow at 2:00 AM, the Federal Reserve's meeting resolution will be released. Fed Chairman Powell will hold a press conference at 2:30 AM.
The market expects the Federal Reserve may keep interest rates unchanged to buy time to assess the impact of Trump's policies on the U.S. economy, which currently faces ongoing inflationary pressures and increasing recession concerns.
The new tariff measures introduced by the Trump administration, combined with retaliatory actions from U.S. trading partners, have weakened consumer confidence and raised Americans' expectations for future inflation. Since some tariffs were delayed shortly after being announced, the ultimate impact of the trade war on the economy remains unclear. This uncertainty may lead policymakers to adopt a wait-and-see attitude, reluctant to bind themselves to any specific policy path.
The market generally expects the Federal Reserve to maintain the benchmark interest rate in the range of 4.25% to 4.5%. Given recent data showing a slowdown in economic activity, the post-meeting statement may change slightly. Powell's press conference will be the focus of market attention.
This week, in the so-called dot plot, the Federal Reserve will continue to hint at two rate cuts in 2025.
The Federal Reserve may soon slow down the pace of asset maturities on its balance sheet, a process known as quantitative tightening (QT), and even completely suspend this process (cease balance sheet reduction) amid concerns that uncertainties over the debt ceiling could create friction in the Treasury market.
In the minutes from the Federal Reserve's January meeting, they revealed that they discussed the potential need to pause or slow down the quantitative tightening plan (which has been ongoing since June 2022) until lawmakers can reach an agreement before exhausting the government's borrowing authority.
Adjustments to the balance sheet policy may be announced in the coming months, possibly as early as this week.
On Tuesday, due to the increasingly tense situation in the Middle East and concerns over U.S. President Trump's tariff plans, investor demand for gold as a safe-haven asset surged, causing gold prices to soar to a historical high of around $3045.
Gold investors have also increased their bets, believing that in the context of rising recession risks due to the Trump administration's aggressive policies, the Federal Reserve will have to lower interest rates faster than expected this year. Current market pricing shows that the Federal Reserve may cut borrowing costs by 25 basis points at each of its monetary policy meetings in June, July, and October, further supporting gold prices.
This week's meeting may provide clues about the future interest rate cut path, with Powell's monetary policy statement and comments being closely scrutinized by investors, which will drive demand for the dollar and impact gold trends.
Recently, gold prices have broken and stabilized above the psychological threshold of $3000, indicating that the minimum resistance direction for gold prices remains upward. Therefore, any pullback may be seen as a buying opportunity, as the Federal Reserve's rate-cutting cycle will continue to support gold prices.