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At 11:03 GMT, XAU/USD is trading $2883.31, down $14.31 or -0.49%.
Fed Chair Powell Signals No Rush to Cut Rates
Gold’s decline comes after Federal Reserve Chair Jerome Powell reiterated that the central bank is in no hurry to cut interest rates, despite acknowledging that policy adjustments would depend on further cooling inflation and labor market conditions. His comments reinforced expectations that rates could remain elevated for longer, pressuring gold, which typically benefits from lower interest rates due to its non-yielding nature.
Investors are closely watching U.S. economic data, particularly the January Consumer Price Index (CPI) report, expected to show a 0.3% monthly increase following December’s 0.4% rise. A higher-than-expected print could further dampen gold’s appeal by reinforcing the Fed’s cautious stance on rate cuts. Thursday’s Producer Price Index (PPI) data and Powell’s testimony before Congress remain additional 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 imposing fresh tariffs on steel and aluminum, U.S. officials are finalizing plans for reciprocal tariffs, raising fears of a trade war. Rising import costs could contribute to inflationary pressures, complicating the Fed’s policy outlook.
Meanwhile, energy prices have been climbing, pushing 2-year inflation swaps to near 2.8%, the highest in nearly two years. This suggests markets are bracing for persistent inflation, which could keep real yields elevated and challenge gold’s upside momentum.
Treasury Yields Hold Above 4.5% Ahead of CPI Report
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