Economic Overview: Gold Prices React to Fed Policy Statements
Gold prices experienced a modest decline on Wednesday following a record high attained in the prior session. The downturn is attributed to stringent comments from Federal Reserve Chairman Jerome Powell regarding monetary policy, coupled with expectations for a slowdown in interest rate reductions this year. Market participants are bracing for a key inflation report from the United States.
As of 02:32 GMT, gold prices in spot transactions fell by 0.1 percent to $2,895.38 per ounce, after surging to an unprecedented level of $2,942.70 on Tuesday. Meanwhile, U.S. gold futures fell by 0.4 percent, settling at $2,922.40.
Powell indicated on Tuesday that the economy is performing well, asserting that the Federal Reserve is not in haste to further lower interest rates. However, he noted that adjustments would be considered should inflation decreases or if there are indicators of a weak labor market.
Gold is often regarded as a hedge against inflation; however, elevated interest rates diminish the appeal of non-yielding assets.
In related developments, Mexico, Canada, and the European Union expressed strong opposition to the recent decision by U.S. President Donald Trump to impose tariffs on all imports of steel and aluminum starting next month. This move has intensified concerns regarding the potential onset of a significant global trade conflict, with investors anticipating further announcements on trade duties.
In other precious metals, silver stabilized at $31.83 per ounce, while platinum held steady at $983.15. Palladium recorded a slight increase of 0.3 percent, reaching $978.75.
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