Gold Holds Steady as Powell Dismisses March Rate Cut Expectations
Gold continues to hold steady as the Fed holds interest rates.
The U.S. central bank left interest rates unchanged but Powell knocked down the idea the Fed could cut rates in the spring, which many market participants have been expecting.
Powell sounded some dovish notes but the key comment is "not March", which should keep the rate-cut hounds at bay for now, said Tai Wong, a New York-based independent metals analyst.
Gold has really been fairly bulletproof, but incoming data will be heavily parsed, Wong added.
Powell has promised no cuts before March but Gold continues to hold around the mid USD2,000s. Expect gold to strengthen as the year progresses and rate cuts become inevitable.
Low interest rate enviroments lower the opportunity cost of holding gold, a non-yielding asset, and can act as a store-of-value hedge against inflation, which usually rises as interest rates come down.