Gold prices hold steady amidst mixed signals from Fed
LONDON (Feb 8) Gold prices remained unchanged on Wednesday, after receiving somewhat conflicting signals from the Federal Reserve on monetary policy.
Two consecutive days of small gains have helped gold recover from a near one-month low it hit last week. On Tuesday, Fed Chair Jerome Powell's speech had a volatile effect on gold prices. While Powell mentioned the need for the central bank to raise interest rates due to a robust labor market and elevated inflation, he also acknowledged the onset of "disinflation" and the need for patience in order to bring down prices. This was interpreted as progress being made against inflation and weighed down the dollar, leading to gold settling higher.
Spot gold was trading at $1,873.65 an ounce, while gold futures increased by 0.1% to $1,886.00 an ounce at 19:27 ET. The recent surge in US nonfarm payrolls had a negative impact on gold prices last week, with investors fearing that the Fed might raise interest rates more than anticipated this year.
However, the outlook for gold remains optimistic for the year. Traders are betting on a reversal in the Fed's hawkish stance as US economic growth cools down, and a potential recession is expected to drive up safe-haven demand for gold.
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