US Fed meeting: ⁠How FOMC meeting will impact gold and crude oil prices?

The US Federal Open Market Committee (FOMC) has commenced its two-day meeting, scheduled for March 18-19. The rate-setting committee is expected to keep the federal funds rate unchanged at 4.25%-4.5%.

However, they are also expected to provide hints about the future direction amid the uncertainty surrounding President Donald Trump’s trade and fiscal policies. This could involve adjustments to forecasts for inflation and economic growth or indications of how frequently, if at all, they plan to further reduce interest rates.

“Markets widely anticipate that the Federal Reserve will maintain the federal funds rate at 4.25%-4.50% during its meeting starting tomorrow. While no immediate cuts are expected, investors are pricing in deeper reductions later this year as inflation eases, with U.S. inflation falling to 2.8% in February due to lower gasoline and fuel oil prices. The Fed’s dot plot, which outlines policymakers’ rate projections, will be closely watched for future guidance. However, caution remains as Trump’s tariff policies could reintroduce inflationary pressures, influencing future Fed decisions,” said Mayank Mundhra, FRM- VP Risk & Head Research Abans Financial Services Ltd.

The outcome of the March FOMC meeting will have a direct impact on gold and crude oil prices , primarily through its influence on interest rates, the U.S. dollar, and inflation expectations.

Gold has surged about 14% in 2025, after ~27% in 2024, driven by large political uncertainties and central bank buying. Inflation expectations have not played a major role in the rally so far. Going ahead, with reducing inflation concerns and potential rate cuts, gold rally may continue fueled by uncertainties globally. Delayed cut in rates, will slower the momentum, experts say.

According to Narinder Wadhwa, Managing Director & CEO of SKI Capital Services Ltd., if the Fed maintains rates, gold may see limited upside or a slight pullback, as higher yields make non-yielding assets like gold less attractive.

“Gold is highly sensitive to interest rate expectations and the U.S. dollar. Dovish Signals (Rate Cuts Expected in 2025) If Powell signals rate cuts later in the year, the dollar could weaken, boosting gold prices as lower rates reduce the opportunity cost of holding gold,” Wadhwa said.

Meanwhile, Ajit Mishra – SVP, Research, Religare Broking Ltd, believes that gold could regain its upward momentum. “if policymakers push back against easing expectations, gold may undergo further consolidation. In the near term, we expect gold to trade within the $2,850-$3,050 range, with a bullish outlook,” he said.

Crude oil prices have shown significant volatility in 2025, driven by geopolitical tensions and global demand concerns. Brent Crude opened the year at $74 per barrel, surged to a peak of $82 per barrel by Jan 15, 2025, before retreating to $70 per barrel by Mar 5, 2025.

While the Fed’s decision to maintain interest rates might not directly influence oil prices, the broader economic implications, such as economic performance and consumer spending, could affect oil demand, says Vinit Bolinjkar, Head of Research, Ventura.

Crude oil’s reaction will hinge on the Fed’s economic outlook. Mundhra of Abans Financial Services further added, “A dovish stance could weaken the dollar, making oil cheaper for global buyers and boosting demand. However, concerns over inflationary pressures from tariffs may delay cuts, strengthening the dollar and weighing on prices.”

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.