Everbright Futures: Fed hawkish stance, gold faces short-term pressure and pulls back

International precious metal prices generally declined, with overnight London spot gold down 3.86%, COMEX gold futures down 3.68%, and SHFE gold down 2.23%. The escalation of geopolitical tensions combined with the Federal Reserve’s hawkish tone became the straw that broke the camel’s back for gold, but investors need not be overly pessimistic. With rapid U.S. inflation rebound, real interest rates are expected to weaken, suggesting a short-term wait-and-see approach or a dip-buying strategy.

The Federal Reserve’s stance remains hawkish, with the dot plot maintaining expectations of one rate cut each this year and next. Regarding economic forecasts, compared to December, this report slightly raised the 2026 GDP growth forecast from 2.3% to 2.4%, but also increased the 2026 core PCE inflation forecast from 2.5% to 2.7%, reflecting the Fed’s caution about the uncertain impact of geopolitical conflicts on inflation and the economy.

On the geopolitical front, the Iran-U.S. conflict has escalated, with both sides attacking energy facilities. Iran’s southern oil facilities were targeted, and Iran announced retaliatory strikes on oil facilities in three Middle Eastern countries, including an attack on a Riyadh refinery and U.S.-designated areas, damaging oil equipment. Crude oil prices surged rapidly, sparking renewed fears of a slowdown in the global supply chain and the global economy. (Everbright Futures)