Market Volatility Rises as Fed Holds Rates, Gold Hits Record, and Tariff Uncertainty Looms

The U.S. dollar showed resilience on Thursday, appreciating against major currencies as Federal Reserve policymakers held interest rates steady and signaled a cautious approach to future rate cuts. With ongoing uncertainty surrounding President Trump’s trade tariffs, investors are closely monitoring potential risks and opportunities in the currency, stock, commodity, and energy markets.

Currency Markets: Dollar Gains Amid Tariff Uncertainty

The Federal Reserve’s decision to keep interest rates within the 4.25%-4.50% range, coupled with expectations of two rate cuts later this year, initially provided some relief to risk markets. However, concerns over Trump’s impending reciprocal tariffs on April 2 kept the dollar strong, as investors anticipated potential economic disruptions.

• Euro struggles – The euro fell 0.46% against the dollar to $1.0852, reflecting investor concerns over the impact of U.S. trade policies on the European economy.
• Swiss franc weakens – The Swiss National Bank’s decision to cut interest rates to 0.25% led to a 0.5% depreciation against the dollar, as policymakers flagged increasing economic uncertainty.
• British pound’s mixed session – Sterling briefly touched a four-month high of $1.3015 before retreating to $1.29665 amid cautious sentiment.
• Japanese yen under pressure – The yen slipped to 148.79 per dollar after the Bank of Japan held rates steady, citing global uncertainty from U.S. trade policies.
• Australian dollar tumbles – Weaker-than-expected Australian employment data sent the Aussie 0.9% lower to $0.6303.

Market Insight: The dollar’s strength is largely being driven by safe-haven flows amid uncertainty over tariffs and the Fed’s cautious stance. As long as geopolitical tensions and protectionist trade measures remain unresolved, the greenback could maintain its edge against major currencies.

Stock Market: Tariff Concerns Weigh on Equities

U.S. stocks fluctuated throughout Thursday’s session before closing slightly lower, as investors digested the Fed’s policy statement and mounting trade concerns.

• The Dow Jones Industrial Average lost 11.31 points (-0.03%) to 41,953.32.
• The S&P 500 declined by 12.40 points (-0.22%) to 5,662.89.
• The Nasdaq Composite dropped 59.16 points (-0.33%) to 17,691.63.

The market’s muted reaction highlights the balancing act between monetary policy optimism and uncertainty over tariffs and economic growth. While the Fed’s stance suggested upcoming rate cuts, Trump’s aggressive trade measures could weigh on corporate earnings and consumer sentiment.

• Tech stocks underperform – Technology was among the weakest sectors, reflecting concerns over the impact of tariffs on supply chains.
• Energy sector outperforms – Crude oil prices surged nearly 2% after new U.S. sanctions on Iran, supporting energy stocks.
• Corporate outlooks diverge –

Market Insight: Investors should remain cautious amid increasing trade policy uncertainty. While Fed rate cuts are bullish for equities, escalating trade tensions could offset these gains by dampening global economic growth.

Gold: Record Highs Fueled by Uncertainty

Gold prices eased slightly on Thursday after touching an all-time high of $3,057.21 per ounce earlier in the session. Spot gold ended the day at $3,038.79 (-0.3%), while U.S. gold futures settled at $3,043.80 per ounce.

Factors supporting gold’s bullish outlook:

• Potential Fed rate cuts – Lower rates reduce the opportunity cost of holding non-yielding assets like gold.
• Geopolitical uncertainty – Ongoing U.S.-China trade disputes and Middle East tensions are keeping demand for safe-haven assets elevated.
• Hedging against inflation – With Trump’s tariffs expected to increase costs for U.S. consumers and businesses, investors are turning to gold as an inflation hedge.

Market Insight: Despite a slight pullback, gold remains a strong hedge against market uncertainty. If the Fed moves ahead with rate cuts and geopolitical risks remain elevated, gold could continue its upward trajectory, targeting $3,100+ in the near term.

Oil Prices: New Sanctions and OPEC+ Cuts Drive Gains

Crude oil prices rose nearly 2% on Thursday following fresh U.S. sanctions on Iran, adding to global supply concerns.

• Brent crude gained $1.22 (+1.72%) to settle at $72 per barrel.
• WTI crude (April contract) increased $1.10 (+1.64%) to $68.26 per barrel.
• WTI crude (May contract) settled up $1.16 (+1.73%) to $68.07.

Key drivers:

• U.S. sanctions on Iran – The U.S. government imposed sanctions on Chinese refineries buying Iranian crude, adding supply risks.
• OPEC+ production cuts – Seven member nations, including Russia, Kazakhstan, and Iraq, agreed to additional output reductions until June 2026.
• Rising U.S. inventories – Crude inventories unexpectedly rose by 1.7 million barrels, exceeding expectations of a 512,000-barrel increase.

Market Insight: Oil prices could remain volatile as geopolitical risks battle against global demand uncertainties. While supply disruptions from sanctions and OPEC+ cuts are bullish, a strong dollar and trade uncertainties could limit gains.

My Final Thoughts: Positioning for Market Volatility

1. Stay Defensive – Amid trade tensions, gold and defensive stocks (utilities, consumer staples) could provide stability.
2. Monitor Currency Trends – The dollar’s strength is driven by uncertainty, but a shift in Fed policy could weaken the greenback later this year.
3. Watch Oil Dynamics – Sanctions and OPEC+ cuts are bullish, but demand-side risks remain.
4. Tech Sector Uncertainty – With tariffs affecting supply chains, tech stocks could face increased volatility in the near term.
5. Rate Cuts Still on the Table – Investors should remain alert to shifts in the Fed’s tone as economic conditions evolve.