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Gold prices fluctuated near a one-week high on Wednesday as traders looked to US inflation data as traders looked for clues to a rate hike after the Federal Reserve chief fueled a bullion rally in the previous session. We have compiled the analysis and forecasts of the Fed’s policy stance and gold prices for the readers of Cryptokoin.com .

Jerome Powell simply lived up to expectations

DailyFX currency strategist Ilya Spivak, according to Ilya Spivak, “Fed Chairman Jerome Powell’s confirmation hearing has been nothing short of what the market is currently looking for. a hawk did not bring a discourse”. Jerome Powell said the central bank is committed to tackling inflation, and a return to higher policy rates and divestment of assets is necessary to sustain current k-expansion rather than curb job growth.

Indicator 10-year rates pulled back and the dollar fell to its weakest level since November after Jerome Powell’s statement. Gold is considered a hedge against high inflation, but the metal is highly susceptible to high interest rates, which increases the opportunity cost of holding non-yielding bullion. Ilya Spivak comments:

In the NFP report we saw last Friday, inflation was much warmer than expected. If that were reflected in the CPI figure, I would expect gold to drop around speculation that the Fed should eventually be more hawkish than it was.

Ed Moya: Gold shorters will be pissed as long as it stays above $1,800

Kitco Metals senior analyst Jim Wyckoff said, “Jerome Powell is not more hawkish than expected. It may have calmed the bulls a little bit.” Jerome Powell said policymakers are still discussing approaches to shrink the Fed’s balance sheet and that inflation is well above target and there is a ‘long way’ to any situation close to restrictive policy.

OANDA senior market analyst Ed Moya said in a note, “The rally in the bond yield has stalled as Fed Chairman Jerome Powell signaled that the Fed will begin to normalize policy this year. and with the effect of this, gold prices rose yellow” and comments:

The longer gold stays above $1,800, the more angry the shorts will be.

Peter Mooses, a senior market strategist at RJO Futures, says the uncertainty associated with the pandemic and volatility in broader markets are also helping the safe-haven.

“There is room for gold to rise to the $1,830 region”

The open interest in the gold futures markets is about 23.6k contracts on Tuesday, according to preliminary pressures from CME Group. It rose to the largest single-day increase since 8 November. Along the same lines, volume rose by approximately 15.6K contracts, reversing the previous day’s decline.

Market analyst Pablo Piovano states that gold registered its third consecutive daily rise on Tuesday, with the sharp increase in open interest and the resumption of a bullish trend in volume. However, there is room for the precious metal prices to rise to the $1,830 region in the near term.


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