(Kitco News 25.3.2025) - Even though the U.S. dollar index has managed to hold critical long-term support above 103 points, this is not a major threat to the gold rally because U.S. interest rates won’t provide much support for the greenback, according to one market strategist.
In an interview with Kitco News, George Milling-Stanley, Chief Gold Strategist at State Street Global Advisors, said that he does not expect the Federal Reserve’s current neutral stance to pose much of a threat to gold prices for the rest of the year.
He made the comments after the Federal Reserve held interest rates unchanged last week. In its updated economic projections, the U.S. central bank lowered its growth forecast and increased its inflation outlook. The Federal Reserve expects the U.S. economy to grow by 1.7% this year with inflation rising to 2.7%, up from the previous estimates of 2.1% and 2.5% respectively.
The U.S. dollar is seeing some buying momentum as the Federal Reserve’s interest rate forecast, also known as the dot plot, remained unchanged, signaling two rate cuts this year. Following weak economic data and a sharp selloff in equities, markets have been pricing in three rate cuts this year.
However, Milling-Stanley said that confusion and uncertainty surrounding President Donald Trump’s potential tariffs will outweigh the impact of the Federal Reserve’s monetary policy on the U.S. dollar.
“Guess what normally thrives in times of confusion and uncertainty? It tends to be gold,” he said. “Powell was absolutely right when he pointed to the uncertainties over tariffs. I think that he was sounding a warning that the government had better get its act together on what tariffs are going to come into effect, at what level they're going to be, and who is going to be impacted.”
Milling-Stanley added that any clarity around U.S. import tariffs could create some selling pressure on gold as prices test support around $3,000 an ounce. Media reports have already started circulating that Trump’s tariffs could be more narrow than previously expected, reducing the threat of a global trade war.
Although gold prices have dropped from last week’s all-time high above $3,050 an ounce, Milling-Stanley said that this rally is far from over. He added that a consolidation period could be healthy for the market.
“I would not be surprised to see us trade on either side of $3,000 for a considerable period this year. I think that is perfectly possible,” he said. “I will have more faith in the sustainability of prices above $3,000 if it takes us part of this year to get through it.”
Although gold could tread water for a while, Milling-Stanley said that he expects gold prices to continue to move higher by year-end.
“It may take us a little longer than some people expect to get through $3,000, but I don't think people should be worried about that. I'm not seeing major headwinds here at all,” he said. “A neutral Fed, I think, is probably the right place to be right now. And I don't expect that to be any kind of pressure on the price.”
Milling-Stanley said that his team is currently standing by the initial 2025 price forecast, which sees a 50% chance of prices trading between $2,600 and $2,900 an ounce and a 30% chance of prices trading between $2,900 and $3,100 an ounce. However, he added that there is a good chance they will adjust their price forecast given the rally so far this year.
One of the biggest reasons Milling-Stanley expects gold prices to remain well supported at these elevated levels is that investors are only now starting to move into gold-backed exchange-traded funds to diversify away from disappointing equity markets.
“We expect ETFs to be a major driver of investment demand for the remainder of this year,” he said.
According to data from the World Gold Council, global gold-backed ETFs saw inflows of around 31 tonnes last week, valued at $3 billion. This was the eighth consecutive week of inflows, and North American funds account for most of the gains.
SPDR Gold Shares (NYSE: GLD), the world’s biggest gold-backed ETF, has seen significant growth in recent weeks. State Street is the marketing agent for GLD and the Micro ETF GLDM.
“Year-to-date, GLD is up $3.75 billion. GLDM is up $1.25 billion, so the two combined are up $5.5 billion,” he said. “I'm very pleased to see that ETFs are finally playing catch-up because they have not really taken a full part in this big revival in Western world investment we've seen over the last couple of years.”
Neils Christensen has a diploma in journalism from Lethbridge College and has more than a decade of
