Gold and U.S equity prices lost some momentum after the U.S Fed’s FOMC meeting yesterday – gold dropping $52/oz (2%), to $1,810 after the announcement. Today, gold’s hit continued as U.S Treasury yields and the Dollar strengthened overnight – dropping the safe haven below $1,800/oz before steadying at $1,798/oz. 

The Fed meeting was described by Fed Chair Jerome Powell as a “talking-about-talk-about” meeting, wherein they discussed the potential pullback of monthly asset purchases and the likelihood of two interest rate hikes by 2023. However, there was no clear decision with regards to monetary policy.

Powell also stated that inflation was “higher and more persistent” than anticipated. Consequently, the Fed increased its inflation expectations for the year with a whole percentage point. The resurgence in inflation, despite the Federal Reserve’s best efforts to label it transitory, strengthens the fundamentals for gold, despite yesterday’s knee-jerk market reaction.

“Gold definitely took a hit on the more hawkish comments coming from Powell, but it looks like the market may have overreacted a bit, with traders buying the dip today,” said John Feeney, business development manager at Guardian Gold Australia to Bloomberg.

The yellow metal was last seen trading at $1,798/oz