Gold price steadies near $3,300 after Fed flags stagflation risks in May minutes

• Fed minutes warn of stagflation risks if tariffs drive inflation and weaken jobs outlook.
• Policymakers favor cautious stance as economic effects of trade policy remain unclear.
• Gold trades rangebound between $3,280-$3,360; RSI suggests limited near-term momentum.

Gold prices recovered some ground on Wednesday as the Federal Reserve revealed in the May 6-7 minutes that they see rising inflation and unemployment risks increasing due to the trade war. At the time of writing, XAU/USD is trading at $3,300, virtually unchanged.

XAU/USD trims losses as Fed highlights inflation persistence and rising uncertainty amid ongoing trade war

The minutes revealed that inflation could be "more persistent than expected," fueled by higher import taxes proposed by the Washington government. The Fed acknowledged some stagflation risks as "Participants noted that the (Federal Open Market) Committee might face difficult tradeoffs if inflation proves to be more persistent while the outlooks for growth and employment weaken."

Policymakers noted that uncertainty about the economic outlook had risen, "making it appropriate to take a cautious approach until the net economic effects of the array of changes to government policies become clearer."

It is worth noting the Fed meeting was before Trump reduced tariffs on China from 145% to 30%.

Gold price reaction to Fed minutes

XAU/USD edged back above $3,300 and remains hovering around that level. Momentum remains slightly bearish, though the RSI shifted flat, hinting that the yellow metal could continue to trade rangebound within the $3,280-$3,3360 area.