Gold draws some sellers despite a little increase in the USD.
On Wednesday, the price of gold (XAUUSD) attracted some sellers for the second day in a row. It is currently trading around $2,885, down over 0.45% for the day.
Fed Chair Powell’s hawkish comments overnight boosted demand for the USD.
One major reason affecting the non-yielding yellow metal was Federal Reserve (Fed) Chair Jerome Powell’s hawkish comments on Tuesday, which helped boost demand for the US dollar (USD). Furthermore, it appears that a positive risk tone further erodes the safe-haven commodities on the daily chart in somewhat overbought conditions.
Nonetheless, worries about the possible economic effects of US President Donald Trump’s trade tariffs and a worldwide trade war could keep driving up the price of gold. Additionally, traders may decide to hold off on making strong wagers until later in the North American session, when the most recent US consumer inflation data will be release. Therefore, before planning for any significant corrective decline from the all-time peak reached on Tuesday, some prudence is warranted.
Despite increasing USD demand, gold price bulls stay on the sidelines ahead of the US CPI. Federal Reserve Chair Jerome Powell described the economy as healthy in his statements before the Senate Banking Committee on Tuesday overall with a strong labor market and stated that while inflation is decreasing, it is still higher than the target of 2%.
This follows Friday’s largely positive US employment data and forecasts that US President Donald Trump’s initiatives would boost inflation and enable the Fed to maintain its aggressive posture.
Daily Market Update: Rising expectations that Fed would keep interest rates unchanged for the foreseeable future and put pressure on the price of gold for the second day in a row on Wednesday give the US dollar some upward momentum.
In addition to promising more extensive reciprocal tariffs to equal the levies foreign governments apply on US goods, US President Donald Trump signed executive orders imposing 25% tariffs on steel and aluminum imports into the US Trump also signaled he would look at imposing additional tariffs on automobiles, pharmaceuticals, and computer chips, which fueled worries about a global trade war and acts as a tailwind for the safe-haven precious metal. Investors now look forward to the release of the latest US consumer inflation figures for fresh cues about the Fed’s rate-cut path and determining the near-term trajectory for the USD and the non-yielding yellow metal. The headline US Consumer Price Index seen rising 2.9% YoY in January and the core CPI (excluding food and energy prices) coming in at a 3.1% YoY rate, slightly lower than the 3.2% recorded in the previous month.
