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Gold prices slightly lower as Powell holds fast on monetary policy

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(Kitco News) A fairly neutral tone from Federal Reserve Chair Jerome Powell after the central bank stood pat on monetary is creating some renewed selling pressure in the gold market.

Although the precious metal is still well within its current trading range, the gold price was lower as Powell wrapped up his press conference where he didn’t provide any major new guidance on monetary policy.

April gold futures last traded at $1,844.30 an ounce, down 0.57% on the day.

Powell noted that the COVID-19 pandemic remains the biggest risk to the U.S. economy. However, he added that as vaccines continue and fiscal stimulus measures move forward, there is growing optimism that there will be a stronger-than-expected recovery in the second half of the year.

“There is nothing more important to the economy now than people getting vaccinated,” he said.

The gold market has seen little reaction to some dovish comments Powell made as he noted that the central bank continues to maintain accommodative policies for the foreseeable future.

He added that now is not the time to be looking at an exit strategy.

“Tapering is premature. We just created the guidance and want to see substantial improvement,” he said.

When it comes to inflation, Powell said that the committee will be patient and will not react to transient inflation pressures that are expected to crop up in the first half of the year.

“I am more worried about falling short of the recovery than I am about the possibility of higher inflation. We welcome slightly higher inflation.”

However, markets and investors who were waiting for more guidance on future monetary policy were disappointed. Powell said that the central bank’s accommodative policies have been working, and the current stance is appropriate.

Ahead of the press conference, the Federal Reserve announced that it would maintain interest rates at the zero-bound range, in line with expectations.

Live 24 hours gold chart [Kitco Inc.]

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