- Gold prices fell from record highs during the Asian session on Wednesday, coinciding with the rise in some Treasury yields after Federal Reserve Chair Jerome Powell indicated there was no rush to cut interest rates.

- Traders remained biased towards acquiring the dollar ahead of U.S. inflation data (Consumer Price Index), which is expected to influence interest rate expectations.

- However, gold recorded fresh highs this week as investors moved away from risk in the face of increasing trade tariffs under President Donald Trump. Trump imposed a 25% import duty on steel and aluminum and also indicated plans for reciprocal tariffs against America’s largest trading partners.

- This move increased demand for safe-haven assets, primarily gold. Spot gold reached a record high of $2,942.25 per ounce on Tuesday.

- Spot gold fell by 0.4% to $2,887.02 per ounce, while gold futures expiring in April decreased by 0.7% to $2,912.74 per ounce.

- Gold faced significant pressure from the rise in Treasury yields, as the 10-year yield rose again above the 4.5% mark, following statements by Jerome Powell, who stated that the Fed remains cautious about further interest rate cuts.

- In his testimony before the Senate Banking Committee, Powell pointed to persistent inflation, resilience in the U.S. economy, and uncertainty regarding the inflationary effects of Trump’s policies, which provided the Fed with little incentive to cut rates further.

- His comments largely echoed similar language used by the Fed Chair during the central bank meeting in January, when the Fed kept interest rates unchanged.

- Powell also noted that U.S. monetary policy had been sufficiently loosened after a 100 basis point cut in interest rates through 2024.

- Treasury yields rose after Powell’s comments, applying pressure on gold and other metals. The prospect of high interest rates presents additional pressure on non-yielding assets like gold, as it increases the opportunity cost of investing in these assets.

- Nevertheless, despite recent losses, gold steadily increased over the past week.

- On the other hand, other precious metals declined on Wednesday after gaining some ground over the past week, although they lagged behind gold most of the time. Platinum futures remained stable at $1,037.45 per ounce, while silver futures fell by 0.2% to $32.252 per ounce.
-------------------------------------
For more articles click here