XAU/USD Hovers Near Record Highs on Fed Uncertainty, Inflation Fears

Gold prices remained elevated at $2,685 per ounce, just $15 below all-time highs, as persistent inflation concerns and Federal Reserve policy uncertainty support the precious metal. The yellow metal has gained 3.2% this month, outperforming major currencies as traders seek inflation hedges. Market expectations for Fed rate cuts have moderated, with futures pricing 75 basis points of easing over the next 12 months, down from 125 basis points last month. EUR/USD traded sideways near 1.0780 while USD/JPY consolidated around 150.20, reflecting the market's wait-and-see approach. Gold's strength indicates growing concern about sticky inflation and potential policy mistakes by central banks. Technical analysis shows strong support at $2,650, with a break above $2,700 likely triggering momentum buying toward $2,750. The precious metal's correlation with real yields remains negative, suggesting further upside if inflation expectations rise faster than nominal yields.