In the previous trading session, gold showed strong performance, closing at 61769. It was up 0.43%. The increase in demand for safe haven assets due to the ongoing Middle East turmoil and a weaker US dollar were the reasons for the price surge. The cautious market mood is partly due to investors attentively following remarks made by a Federal Reserve official for clues about the central bank’s position on interest rates.
From late December to early January, the U.S. economy exhibited little to no improvement in activity; businesses reported varying degrees of pricing pressure and indications of a cooling labor market. This emphasizes the difficult balance that the Federal Reserve is trying to keep: lowering inflation while maintaining rates of employment and economic growth.
In his recent remarks, the Fed Governor emphasized the improving economic statistics while also acknowledging a slowdown in growth. The minutes of the meeting showed a resolve to deal with uncertainty by maintaining stable policies and increasing borrowing prices.
Citing “known deficiencies,” the governor of the Federal Reserve expressed concerns about a proposed plan to enhance bank capital requirements. Technically, the gold market is showing signs of short covering as open interest dropped by 7% to close at 6944. In spite of this, there was a 264 rupee price increase.
