At 11:03 GMT, XAU/USD $ 2883.31, $ 14.31 or -0.49%falls.
Fed Chair Powell does not hurry to lower the rates
The decline of Gold comes after the chairman of the Federal Reserve Jerome Powell repeated that the central bank is not in a hurry to lower interest rates, despite the acknowledgment that policy adjustments would depend on further cooling inflation and labor market conditions. His comments reinforced the expectations that the rates can stay longer, putting gold under pressure, which usually benefits from lower interest rates due to the non-favorable nature.
Investors keep a close eye on the US economic data, in particular the January Consumer Price Index (CPI) report, which is expected to show a monthly increase of 0.3% after the increase in the 0.4% of December. A higher than expected print could further dampen Gold’s profession by strengthening the cautious attitude of the FED in relation to the interest rate cuts. The producer Price Index (PPI) data from Thursday (PPI) and Powell’s testimony before the Congress remains extra risk events.
Trade tensions and inflation risks keep gold in focus
Gold remains supported by broader uncertainty, including geopolitical risks and global trade tensions. After new rates to impose steel and aluminum, American officials have been completed for plans for mutual rates, which increases the fear of a trade war. Rising import costs can contribute to inflationary pressure, which makes the FED policy prospects complicated.
In the meantime, energy prices have risen, causing 2-year-old inflation waps to push to almost 2.8%, the highest in almost two years. This suggests that markets have a brace for persistent inflation, so that real yields can challenge the upward momentum of Gold.