Gold rose past the $2,300 level again yesterday (Wednesday) after the Federal Reserve (Fed) kept rates unchanged and announced that they were cutting rates based on the latest data.
Additionally, Fed Chairman Jerome Powell chose to remain silent on his future plans for interest rate cuts throughout the year.
Meanwhile, the price of gold is now beginning an extension of its decline back to $2,318.58 which is down 0.95% since it opened at the beginning of the Asian trading session. Immediately after the FOMC report, gold managed to reach a position of $2,328 before it went lower again.
Powell in his speech said that it is not appropriate to reduce the rate until the economic report is confident that it can bring inflation to the 2% target and he hinted that the inflation rate will be a big obstacle this year.
During the meeting, Powell said they will decide the monetary policy by doing the meeting frequency while paying attention to some important data in ensuring a smooth transition for the money market.
He also said that the Fed believes that monetary policy is sufficient to limit the increase in excessive inflation and reduce the potential increase in interest rates for the time being.
The Fed previously kept the federal funds rate at 5.25% to 5.50%. However, the progress of inflation is still in a worrying situation and only the latest data can provide an obstacle.
In addition, Fed policymakers announced significant changes to their balance sheet policies. Starting in June, they will reduce the monthly reduction of holdings in US Treasury securities from $60 billion to $23 billion.
This will mark a shift in their approach in normalizing the balance sheet.
