Gold Ticks Higher as Fed Chair Powell Sticks to Dovish Decision

Gold prices are on the rise in early trading on Wednesday, supported by a weakness in the US dollar and Fed chairman Powell's latest remarks

Arslan Butt•Wednesday, February 24, 2021•1 min read

Gold Ticks Higher as Fed Chair Powell Sticks to Dovish Decision

Gold prices are on the rise in early trading on Wednesday, supported by a weakness in the US dollar and Fed chairman Powell’s latest statements that point to the US central bank maintaining its dovish stance until the economy recovers completely from the pandemic-inflicted downturn. At the time of writing, GOLD is trading at a little above $1,808.

On Tuesday, Powell testified before the Senate Banking Committee and held ground on the Fed’s decision to hold interest rates at low levels and continue with monetary easing. Despite worries about this move pushing inflation higher and causing an economic boom which could lead to additional risks, Powell maintained that Fed would continue with its decision until US inflation and employment levels return to pre-pandemic levels.

The possibility of Fed staying dovish even as economies around the world bounce back in the coming months is keeping the US dollar weak and boosting the safe haven appeal of gold. In addition, the yellow metal’s bullishness was also supported by a decline in the benchmark 10-year US Treasury yields, which reduces the opportunity cost of holding non-yielding bullion among investors.

Meanwhile, the Democrats in the US Congress are trying their best to finalize President Biden’s $1.9 trillion pandemic relief package. The rollout of more fiscal stimulus measures could further boost support the bullish trend in gold in the coming sessions.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Open a FREE Trading Account

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.