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Gold declines on Fed remarks ahead of key data.
Gold Retreats from Record Levels Amid Fed Remarks and Inflation Data Anticipation
Global gold prices declined on Wednesday, pulling back from their all-time highs recorded in the previous session. This retreat came after hawkish remarks from Federal Reserve Chair Jerome Powell, which reinforced expectations of a slower pace of interest rate cuts this year, as investors awaited key U.S. inflation data.
Powell’s Remarks and Their Market Impact
On Tuesday, Powell stated that the U.S. economy remains strong, emphasizing that the Fed will not rush to cut interest rates. However, he acknowledged that the central bank is prepared to take action if inflation declines significantly or if the labor market weakens.
Gold Between Inflation and Interest Rates
Gold is traditionally considered a safe-haven asset against inflation. However, rising bond yields and higher interest rates reduce its appeal as an investment, as it does not generate returns for holders.
Market Movements Ahead of Inflation Data
Shadi Abdu, Chief Analyst at Point Trader Group, noted that markets are witnessing profit-taking after gold reached record levels. He added that traders are closely monitoring the upcoming U.S. inflation data, which could significantly impact gold price movements, especially if core Consumer Price Index (CPI) figures exceed expectations.
Markets Await U.S. Inflation Reports
The U.S. CPI report is set to be released later today at 16:30 Riyadh time. According to a Reuters poll, the index is expected to have risen by 0.3% in January, following a 0.4% increase in the previous month.
Additionally, investors are keeping a close watch on the Producer Price Index (PPI) report, scheduled for release on Thursday. Meanwhile, Powell’s testimony before Congress later today is expected to provide further insights into the Federal Reserve’s monetary policy outlook in the coming months.
