Gold tops $5,400/oz as Fed holds rates, outlook upbeat

Global gold prices jumped to a fresh all-time high, breaking above $5,400 an ounce, after former US President Donald Trump warned Iran to reach a nuclear deal and the US Federal Reserve kept interest rates unchanged, as expected.

Reuters reported that spot gold surged to a record high on Thursday (29 January 2026), climbing above $5,400 an ounce as investors sought safe-haven assets amid heightened economic and geopolitical uncertainty.

Spot gold rose 0.3% to $5,415.52 an ounce at 22:46 GMT, after touching an all-time intraday high of $5,418.39 earlier in the session.

In its post-meeting statement, the Fed said available indicators suggest economic activity is expanding at a steady pace, job gains remain low, and the unemployment rate is showing some signs of stabilisation. Inflation remains slightly above normal.

Fed holds rates as expected; sees economy improving, labour market steady

The US central bank kept its policy rate unchanged at 3.5–3.75%, following a period of consecutive cuts.

CNBC reported that the Fed held the policy rate at 3.5–3.75% after a series of reductions in recent months. “Available indicators suggest that economic activity is expanding at a strong pace. Job gains remain low, and the unemployment rate shows some signs of stabilisation,” the central bank said in its post-meeting statement, adding that inflation remains “slightly elevated”.

On Wednesday, the Fed voted to pause further rate cuts temporarily, at a time when the central bank’s independence is under increased scrutiny and it awaits new leadership.

As markets had anticipated, the policy committee voted to keep rates steady at 3.5%–3.75%, halting a run of three consecutive 0.25 percentage point cuts. The move was framed as an effort to maintain stability in a weakening labour market.

In deciding to hold rates, the committee raised its assessment of economic growth and reduced its concern over the labour market relative to inflation.

Notably, the statement removed language suggesting the committee saw greater risk from a weaker labour market than from higher inflation. The change was viewed as consistent with a more balanced view of the Fed’s dual mandate—low inflation and maximum employment—and could support a slower pace of easing, at least in the near term.

Guidance on the next move was limited. Markets expect the Fed to wait at least until June before adjusting the benchmark rate again.

The statement said the committee would “carefully assess incoming data, evolving outlooks, and the balance of risks” in considering the extent and timing of any further changes—repeating language added in December that markets interpreted as a step back from the easing cycle that began in September 2025.

US Treasury yields rose after the decision, while the S&P 500 hovered near the 7,000 level.

Miran and Waller dissent again

As with the previous meeting, there were dissenting votes. Governors Stephen Miran and Christopher Waller voted against holding rates, supporting another 0.25 percentage point cut. It marked Miran’s fourth consecutive dissent, though he had previously backed a larger 0.5 percentage point cut.

Both were appointed by former President Donald Trump. Miran took office in September 2025 to fill an unexpired term, which ends this Saturday. Waller was appointed during Trump’s first term. Waller has also been interviewed for the position of Fed chair but is seen as a long shot.

The decision came at a time described as “normal” procedure for a period when little feels normal for the central bank.

Fed chair Jerome Powell has only two meetings left before his term ends, concluding a turbulent eight-year tenure that included the global Covid pandemic, a severe recession, and ongoing clashes with Trump.

“If you look at the latest data since the last meeting, it’s clear that the outlook for growth has improved markedly,” Powell said at the press conference. “Inflation is moving close to what was expected and… some labour market data point to evidence of stabilisation. Overall, the forecast has strengthened.”

Recently, the US Department of Justice issued a subpoena to Powell over a major renovation of the Fed’s headquarters in Washington, DC. Earlier, Trump repeatedly threatened to dismiss Powell and has moved to remove Governor Lisa Cook, with the case now awaiting a US Supreme Court ruling.

Asked about attending oral arguments at the high court, Powell said the case could be “perhaps the most important” in the Fed’s 113-year history.

Underscoring these tensions is the fight over the Fed’s “independence”—its ability to operate without political interference. In confirming the Justice Department investigation, Powell spoke unusually bluntly, saying the threat stems from Trump’s attempts to control monetary policy. Previous presidents have criticised Fed decisions and sought to pressure policymakers to cut rates, but none as proactively or publicly as Trump.

The Fed’s economic policy challenge remains

Economic growth, measured by the broadest gauge—GDP—has been strong. The third quarter grew at an annualised 4.4%, and the final three months of the year were estimated to be expanding at an annualised 5.4%, according to the Atlanta Fed’s assessment.

At the same time, job growth has slowed amid the Trump administration’s crackdown on illegal immigration. However, layoffs remain low, and trends in initial jobless claims are at their lowest levels in two years.

Inflation has proved more difficult. While it has eased from a 40-year high in 2022, it remains closer to 3% than to the Fed’s 2% target. That has left some policymakers concerned and keen to pause—or rule out—further rate cuts until there is clearer evidence that price pressures are easing.

Trump’s tariff measures are also an underlying inflation factor. Fed economists generally view tariffs as creating short-term price pressure, which is expected to fade later this year.

Futures markets are pricing in no more than two rate cuts in 2026 and none in 2027, regardless of who becomes the next Fed chair. Market expectations cited Rick Rieder, BlackRock’s head of fixed income, as a leading contender to succeed Powell.