Powell said before a congressional hearing that the US job market “is still a ways off” from the progress the Fed wants to see before reducing its support for the economy. With that being said, the strong interference by the Federal Reserve is not going away just yet, while current high inflation will ease in the upcoming months. Powell’s comment might calm the producers and investors as the Consumer Price Index and Producer Price Index for the US have surged last month.
“It (Powell’s comments) really cements the belief that despite this hotter inflation data, the Fed still remains on course to be fairly accommodative,” said Edward Moya. “You’re going to see more dovish signals from the ECB and the People’s Bank of China, which should provide some support to the dollar, but this is still good news for the stimulus trade and that is going to be very positive for gold,” Gold, as a commodity that’s highly sensitive to the US interest rates, is often seen as a counterweight against inflation. With the weakened dollar and recent dip in US treasury yields, many have taken the opportunity to invest which drove the Gold price up.
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