Fed officials express concern about inflation, gold price hovers around $2640.

The statements made by Federal Reserve officials over the weekend have reinforced the view that the Fed will take a more cautious approach to rate cuts this year. San Francisco Fed President Daly and Fed Governor Kugle both emphasized the need to end the fight against inflation and to reach the Fed's 2% target. Gold price fell by 0.7% last Friday. After the remarks from Fed officials, as of the time of writing, spot gold is trading around $2640 per ounce. The latest dot plot released by the Fed last month showed that officials' expectations for rate cuts in 2025 have been reduced to two. Fed Chairman Powell also hinted that the pace of future rate cuts will be more cautious. This could be a negative factor for gold. The gold price soared by 27% in 2024 and hit a historical high, partly driven by the Fed's relaxed monetary policy. Considering the resilience of the U.S. economy, this may force the Fed to take a more cautious approach to future rate cuts, which is generally bullish for the dollar. Independent analyst Hiren Garasondia suggested that now is the best time for gold bulls to take profit. It is a very wise choice to reduce gold positions before the trend of gold reverses, as safe-haven funds are likely to flow out of gold and into the dollar. However, looking ahead to 2025, some analysts still expect gold to shine again. Analysts suggest that as investors become disappointed with falling yields, some of the $3.7 trillion held in money market funds may flow into gold ETFs, with JPMorgan analyst Greg Shearer calling this the "most bullish part of the gold cycle." The analyst pointed out that another advantage of gold is that this metal has almost no other industrial use apart from being a store of wealth, "Gold does not have the industrial baggage of other commodities, namely being brought down by trade disruptions." In addition, Deutsche Bank believes that gold prices still have room to rise in 2025. The bank predicts that gold prices will fluctuate between $2600 and $2900 per ounce in 2025, with the potential to rise to $3100 per ounce. The bank is optimistic about gold for three reasons: central bank demand for gold will continue to offset the negative impact of a strong dollar on gold prices; increasing consumption demand in China and India, with more local gold mutual funds and ETFs, as well as regulations encouraging gold holdings are driving demand; loose monetary policy and the fiscal policy of the Trump administration may increase the U.S. deficit and push inflation, which will lower the opportunity cost of buying gold relative to the dollar or U.S. bonds.