Gold stabilizes as Fed warns of inflation risks to US economy

Gold stabilized after falling in the previous session due to Federal Reserve Chairman Jerome Powell's warning about inflationary risks to the US economy, according to Bloomberg.

This is the first time regulatory officials have released updated economic forecasts since President Donald Trump announced the introduction of large-scale import tariffs in April. Based on the Fed's projections, the US will experience weak GDP growth, rising inflation, and declining employment this year.

A significant rise in consumer prices could end the central bank's cycle of monetary easing. This would negatively impact gold because it does not generate interest income.

Still, prices for the precious metal are supported by the ongoing tensions in the Middle East, central bank purchases, and inflows into exchange-traded funds. Thanks to these factors, the price of gold has already surged by almost 30% this year.

According to Phillip Nova analyst Priyanka Sachdeva, the proximity of the metal's value to record highs makes further investments vulnerable to macroeconomic changes.