Gold prices rose on Wednesday morning in London, but they remained near one-month lows. Investors digested comments by US Federal Reserve Chairman, Jerome Powell, that the central bank would consider wrapping up asset tapering sooner than planned.
At the start of the midweek’s trading session, gold futures were up 0.23% to $1,780. Tuesday’s closing price of the precious metal was the lowest since November 4, 2021, just $2 behind the previous record.
From earlier session highs near $1810 an ounce, the precious metal has pulled back abruptly to trade in the low-$1770s, a near 2.0% turnaround.
As of now, spot gold prices have fallen by more than 0.5% on the day, but have not yet broken below their weekly lows of almost $1770 printed on Monday.
During the Fed’s meeting later this month, Powell said it will discuss whether to end asset tapering earlier than planned. Additionally, he avoided describing high inflation as a “transitory” phenomenon. As well as giving the dollar a boost, Powell’s remarks caused the dollar to move inversely to gold. Wednesday, the dollar declined.
According to Fed Vice Chairman, Richard Clarida, Fed officials are unhappy with inflation above the central bank’s 2% target, and holding expectations near the 2% target will mean bringing actual inflation down.
The new Omicron COVID-19 variant could hurt consumer confidence, which would weaken the economic recovery, according to Bank of England member, Catherine Mann on Tuesday.
Several countries have already implemented blanket travel bans, which the World Health Organization warned against. Current vaccines are also being studied for their effectiveness against the new variant.
We’ll see U.S. data later in the day, including the manufacturing PMI from the Institute of Supply Management, and the Beige Book from the Federal Reserve. A report on nonfarm payrolls will follow the U.S. job report on Friday.
