16 February 2026 (Navroze Bureau) : Gold prices continued to trade under pressure as a positive risk sentiment in global markets and a modest uptick in the US dollar outweighed expectations of future interest rate cuts by the Federal Reserve. Despite lingering hopes that the Fed may ease policy later this year, bullion struggled to attract safe-haven demand.
Risk-On Mood Weighs on Safe Havens
Global equity markets remained firm, supported by optimism around economic resilience and easing inflation concerns. This risk-on environment reduced demand for traditional safe-haven assets like gold, as investors showed a preference for equities and higher-yielding instruments.
Market participants noted that when risk appetite improves, gold often loses its appeal, especially in the absence of geopolitical shocks or sharp financial stress.
Stronger US Dollar Caps Gold Upside
A firmer US dollar emerged as a key headwind for gold. Since gold is priced in dollars, a stronger greenback makes the metal more expensive for holders of other currencies, dampening demand.
Currency traders attributed the dollar’s strength to stable US economic data and expectations that any Fed rate cuts will be gradual rather than aggressive.
Fed Rate Cut Bets Offer Limited Support
Gold typically benefits from lower interest rates, as falling yields reduce the opportunity cost of holding non-yielding assets. While markets continue to price in potential Fed rate cuts later in the year, officials’ cautious commentary has tempered expectations.
Investors now believe the Fed will wait for clearer evidence that inflation is sustainably moving toward target before easing policy, limiting near-term upside for gold.
Bond Yields and Inflation Expectations
US Treasury yields have remained relatively stable, preventing gold from gaining momentum. Inflation expectations are also anchored, reducing the urgency for aggressive monetary easing.
Analysts say that without a sharp drop in yields or a decisive shift in Fed guidance, gold may remain range-bound in the short term.
Technical and Market Positioning Factors
From a technical perspective, gold has struggled to break above key resistance levels. Some traders have reduced long positions, adding to downside pressure.
However, experts point out that strong central bank buying and long-term inflation hedging demand continue to provide a structural floor under prices.
What Could Revive Gold?
Gold could regain strength if:
- The US dollar weakens decisively
- Economic data points to a sharper slowdown
- The Fed signals earlier or deeper rate cuts
- Geopolitical or financial market risks escalate
Until then, bullion may remain subdued amid competing macroeconomic forces.
Conclusion
Gold’s weakness reflects a tug-of-war between Fed rate cut hopes and stronger risk appetite coupled with dollar strength. With markets leaning optimistic and the Fed staying cautious, gold may struggle to find sustained upside in the near term.
Summary
Gold prices remain under pressure as upbeat risk sentiment and a firmer US dollar outweigh expectations of future Federal Reserve rate cuts, limiting safe-haven demand for the precious metal.