Gold is struggling to make a sustained comeback after Fed Powell tightening policy.
The gold price (XAUUSD) is expected to post its second weekly loss. As numerous Federal Reserve (Fed) policymakers express support for additional tightening. Federal Reserve Chairman Jerome Powell is skeptical that the present interest rate policy is restrictive enough to ensure. That inflation returns to 2% in a timely manner.
Jerome Powell stated. That the Fed is committed to bringing down interest rates. down to 2%. And the central bank will not hesitate to tighten policy further if necessary. Fed policymakers are not optimistic about reaching price stability with current monetary policy. Because the US economy is resilient in terms of consumer spending, labor market performance, and economic performance. As a result, the majority of policymakers are inclined to tighten monetary policy further.
Market Movers: The gold price is under pressure as a result of Powell’s hawkish statements.
As tensions between Israel and Palestine rise, the gold market struggles to recover after purchasing interest near $1,950. As US President Joe Biden says there is no chance of a ceasefire in Gaza, chances for a truce with Middle Eastern nations dwindle.
Israeli missile assaults Army attacks on Palestinian military forces have intensified, while a four-hour humanitarian break each day allows civilians to leave to Gaza’s southern sector.
Meanwhile, hopes are strong that the Middle East conflict would be confined between Israel and Palestine. If this happens, the safe-haven demand for gold will fall.
The release of US inflation data next week will dictate further activity in the US Dollar and bond markets.
The price of gold is expected to fall for the second week in a row as Federal Reserve policy makers consider boosting interest rates further.
Fed Chair Jerome Powell has stated that he is skeptical whether current interest rates are sufficient to combat stubborn inflation.
In a statement to the International Monetary Fund (IMF), Jerome Powell stated that the Fed may need to do a little more to manage price pressures caused by inflation. An increase in the availability of products, services, and labor.
Powell said that the central bank has maintained financial conditions tight, aided by rising bond yields, and that while it would not support excessive policy tightening, failure to contain inflation would be the largest mistake.
Jerome Powell’s comments surprised market participants since they expected him to stress the ‘higher for longer’ interest rate narrative while leaving the door open for future policy tightening due to the strength of the US economy.
Interim St. Louis Fed President Kathleen O’Neill Paese backed Jerome Powell’s hawkish views. Saying “it would be unwise to suggest that further rate hikes are off the table.” Paese stressed the importance of waiting for new economic and inflation data before making any decisions. considering raising interest rates.
While Richmond Federal Reserve Bank President Thomas Barkin is less enthusiastic. About inflation falling to 2%, he is still hesitant to raise rates further. Barkin predicted a downturn as higher interest rates began to weigh on the economy.
Despite Fed Powell’s aggressive comments. The US Dollar Index (DXY) is struggling to break over 106.00. This week’s thin economic calendar kept Fed policy makers’ comments in the focus.
