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Gold (XAU/USD) rose 0.77% on Wednesday as traders anticipated the Federal Reserve's (Fed) first monetary policy decision under Kevin Warsh. The central bank is expected to maintain interest rates amid rising inflation driven by the Iran war. Analysts suggest that while the Fed may keep rates unchanged, the hawkish tilt under Warsh's leadership could signal future tightening, impacting gold's safe-haven appeal. The decision will also test the metal's resilience against inflationary pressures and geopolitical risks.
The Fed's policy shift under Warsh carries significant weight for global markets. A hawkish stance could strengthen the US dollar, pressuring gold prices, while a dovish outcome might boost the metal. Traders are closely monitoring Warsh's communication for clues about future rate hikes, which could influence portfolio allocations between gold, equities, and bonds. The outcome will also affect emerging markets, particularly in the Gulf, where dollar strength impacts trade and investment flows.
For MENA investors, the Fed's decision will shape regional capital movements and currency dynamics. A stronger dollar could increase import costs and inflation in Gulf economies, while a weaker dollar might ease pressure on oil exporters. Key watchpoints include Warsh's remarks on inflation control, the Fed's balance sheet strategy, and how geopolitical tensions in the Middle East intersect with monetary policy. Gold's performance will also depend on its ability to outpace inflation amid rising energy prices.
