(Kitco News) - The gold market remains under pressure, testing initial near-term resistance at $2,900 an ounce as Federal Reserve Chair Jerome Powell reiterated the central bank’s stance that it is in no hurry to adjust its monetary policy.
During his first day of testimony on Capitol Hill, Powell struck a relatively optimistic tone, in front of the Senate Banking, Housing, and Urban Affairs Committee, noting that the U.S. economy continues to expand at a robust pace. However, he provided little forward guidance ahead of next month’s monetary policy meeting.
Markets expect the Federal Reserve to keep interest rates unchanged next month. While the Fed’s neutral stance could negatively impact gold prices, Powell’s comments have had little effect on the precious metal so far.
Spot gold last traded at $2,897.80 an ounce, down 0.33% on the day. The gold market continues to see solid profit-taking after prices hit a fresh record high overnight. Some analysts have warned that while gold is in a significant long-term uptrend, its near-term price action is becoming slightly overbought and at risk of a correction.
In the broader landscape, the Federal Reserve’s monetary policy has had little impact on gold. The precious metal has rallied to consecutive record highs even as interest rates and the U.S. dollar have remained elevated. Analysts have said that gold continues to attract safe-haven interest as investors hedge against rising geopolitical uncertainty.
Looking ahead, Powell suggested that current monetary policy appears to be balanced.
“With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said in his opening remarks. “If the economy remains strong and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly. We are attentive to the risks to both sides of our dual mandate, and policy is well positioned to deal with the risks and uncertainties that we face.”
