Gold price struggles as Fed endorses tightening policy, US inflation data awaited

In the near term, the price of gold (XAU/USD) has fallen sharply to around $1,950 after a brief recovery. This decline is driven by the strong inclination of Federal Reserve policymakers to tighten monetary policy further.

Federal Reserve Chair Jerome Powell supports tightening policy and emphasizes the need for a more restrictive interest rate policy to ensure a timely return of inflation to 2%. The majority of policymakers lean towards further tightening as they are not confident in the current level’s ability to achieve price stability. They highlight the resilience of the US economy based on consumer spending, the labor market, and overall economic performance.

Gold price struggles to sustain recovery amid Powell’s endorsement of tightening policy. Middle East tensions have eased, suggesting containment of the Israel-Palestine conflict. The upcoming release of US inflation data will guide the direction of the US Dollar and bond markets.

Overall, the price of gold is expected to record a second consecutive bearish weekly closing due to the endorsement of further tightening by several Fed policymakers.