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Title: Gold Down as Investors Continue Digesting Hawkish Powell Remarks

May 18, 2022 12:52AM ET

By: AnalysisWatch

Gold prices were lower in Asia on Wednesday morning as the dollar continued to retreat from a 20-year high and faced pressure from rising government bond yields. Investors were also digesting recent aggressive comments from Federal Reserve Chairman Jerome Powell.

Gold futures contracts fell 0.59% to $1,808.24 an ounce by 12:48 p.m. EDT. The dollar, which usually moves inversely to gold, rose slightly on Wednesday but extended its decline for a fourth day. Increased investor risk appetite also reduced the appeal of the safe-haven greenback.

However, yields on 10-year US Treasury bonds stabilized after their sharp rise in the previous session.

Powell pledged on Tuesday that the Fed will raise interest rates as needed to curb unprecedentedly high inflation, which he said threatens the fundamentals of the economy. So far in 2022, the Fed has raised rates by three-quarters of a percentage point and is on track to raise them again in half-percentage-point increments at its next two meetings in June and July 2022.

Later in the day, Philadelphia Fed President Patrick Harker will speak, and later in the day there will be a meeting of G7 finance ministers and central bankers.

Japan's Q1 2022 GDP fell 1% y/y and 0.2% q/q, while Australia's wage price index rose 2.4% y/y and 0.7% q/q.

Strong US retail and factory sales data for April supported investor sentiment as consumers bought motor vehicles and visited restaurants, showing no signs of weakening demand despite high inflation.

Among other precious metals, silver and palladium rose 0.2%, while platinum gained 0.1%.

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