After Powell's hawkish speech, gold remains flat in early trade

28 Aug 2023 , 10:38 AM

With investors awaiting economic data this week for confirmation on rate trajectory, gold prices were unchanged on Monday as Federal Reserve Chair Jerome Powell’s hawkish rhetoric dashed hopes that the U.S. rate-hiking cycle was about to come to a stop.

As investors awaited important economic data, such as the U.S. non-farm payroll report on Friday, spot gold was little changed at $1,915.79 per ounce while U.S. gold futures rose 0.2% to $1,943.60.

The heads of the U.S. Fed and the European Central Bank (ECB) dispelled any hopes that the 2% inflation target they have long pursued may be subject to adjustment.

Speaking on Friday at the annual conference in Jackson Hole, Wyoming, Powell left the door open to future rate hikes and emphasized the surprising resilience of the American economy, even as he acknowledged a slowdown in inflation over the previous year.

Following Powell’s speech, interest rate futures linked to the Fed’s policy rate were priced in with a more than even likelihood of tightening at either the November or December policy meetings.

In order to combat inflation, the United States will likely need to raise interest rates one more time before putting them on pause for ‘a while,’ Cleveland Federal Reserve Bank Loretta Mester said on Saturday.

Before decision-makers can say their efforts have been successful, the decline in inflation in the euro zone must be timely and sustainable, according to ECB President Christine Lagarde.

In its most recent effort to support the faltering market, China cut the stamp tax on stock trading in half as of Monday. This comes as the world’s second-largest economy struggles to recover.

In the week ending on August 22, COMEX gold speculators reduced their net long position by 20,845 contracts to 25,695, according to data released on Friday.

Spot silver increased 0.3% elsewhere to $24.30 an ounce, and platinum held steady at $944.21. Inching up 0.7% to $1,232.39, palladium.

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