Gold prices hold steady despite dovish Fed; market eyes nonfarm payrolls data

Gold prices have seen a steadfast performance this morning, showing only modest gains despite a weaker dollar and Treasury yields.

The Federal Reserve’s unexpectedly dovish tone, expressed by Fed Chair Jerome Powell, influenced market sentiment. Powell’s comments tempered expectations of additional rate hikes, resulting in a decline in the dollar and Treasury yields. As a result, investor risk appetite has increased, shifting their attention to stocks and currencies rather than gold.

At 11:30 GMT, spot gold saw a 0.29% increase, reaching $1,988.19 per ounce. The Federal Reserve’s decision to keep interest rates unchanged, as widely anticipated, has not significantly boosted gold’s fortunes. Traders are now eagerly awaiting the release of the U.S. nonfarm payrolls data on Friday, which could potentially provide momentum for the precious metal.

The private payrolls reading released on Wednesday indicated a cooling trend in the job market, suggesting a softer nonfarm payrolls reading. While gold stands to benefit from the possibility of no further rate hikes, the prospect of substantial gains in the yellow metal remains uncertain. Powell emphasised the Fed’s commitment to reaching its 2% inflation target, signalling that the bank’s target rate would likely remain above 5% until at least the end of 2024.