WASHINGTON (dpa-AFX) - After moving substantially higher over the past few sessions, the price of gold pulled back sharply during trading on Wednesday following remarks by Federal Reserve Chair Jerome Powell.
Front Month Comex Gold for September delivery tumbled $48.50 (or 1.28%) to $3,732.10 per troy ounce. Notably, gold ended the previous session at a record closing high.
Front Month Comex Silver for September delivery slid by 41.40 cents (or 0.94%) to $43.777 per troy ounce.
In his first speech on the economic outlook following last week's rate cut, Powell warned that cutting rates too aggressively could pose inflation risks to the economy.
While acknowledging that the US is collecting a good bit of revenue from high tariffs, he emphasized that the effects of tariffs have yet to be absorbed by US consumers.
Powell stressed that policy makers face a 'challenging situation' in balancing risks to inflation and the labor market.
However, despite Powell's cautious stance on further monetary easing, traders continue to bet on two more rate cuts this year.
With the next Fed meeting scheduled for the end of October, Powell reiterated that the Federal Open Market Committee will be reviewing data carefully before formulating a policy path.
According to CME Group's FedWatch Tool, investors are betting on a 94.1 chances of a 25 basis point interest rate cut at the Fed's October 28-29 meeting.
The pullback by the price of gold also came amid an increase in the value of the US dollar, with the US dollar index climbing by 0.6 percent.
On the U.S. economic front, a report released by the Commerce Department this morning showed new home sales in the U.S. unexpectedly skyrocketed to their highest level in well over three years in the month of August.
The Commerce Department said new home sales soared by 20.5 percent to an annual rate of 800,000 in August after slumping by 1.8 percent to a revised rate of 664,000 in July.
Economists had expected new home sales to slip by 0.3 percent to an annual rate of 650,000 from the 652,000 originally reported for the previous month.
With the unexpected spike, housing starts leapt to their highest level since hitting an annual rate of 807,000 in January 2022.
In geopolitical news, Russia brushed aside the comments by US President Donald Trump that Ukraine may go beyond re-claiming its pre-2022 borders.
Meanwhile, Ukraine went more aggressive by attacking a major oil refinery in Russia's Bashkortostan region.
In the Middle East, the September 9 attacks in Doha by Israeli Defense Forces that targeted Hamas leaders continues to receive widespread condemnation from the Arab world.
In a UN General Assembly speech, Qatar's Emir Sheikh Tamim bin Hamad Al Thani called Israel a 'rogue' nation. However, Israel warned of more such attacks to flush out Hamas militants hiding anywhere in the world.
Much like the geopolitical uncertainty, tariff uncertainty is consolidating gold prices. The US Supreme Court is set to hear an appeal by the Trump administration against a lower court verdict that deemed the 'reciprocal tariffs' as 'illegal.'
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