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Upbeat Powell Sends Gold to 16-Month Low

Gold has steadied in the Wednesday session after posting sharp losses on Tuesday. In North American trade, the spot price for one ounce of gold is $1226.78, down 0.08% on the day. On the release front, U.S housing numbers were softer than expected. Building Permits dropped to 1.27 million, shy of the estimate of 1.33 million. Housing Starts fell sharply to 1.17 million, down from 1.35 million. This was well below the estimate of 1.32 million. Federal Reserve Chair Jerome Powell is testifying before the House Financial Services Committee. On Thursday, the U.S releases Philly Fed Manufacturing Index and unemployment claims.

With the U.S economy performing well, there was no surprise that Fed Chair Jerome Powell sounded bullish on the U.S economy during testimony before the Senate Banking Committee on Tuesday. Powell said that he expected the labor market to remain tight and inflation to stay close to the Fed’s target of 2 percent for the next several years. Powell added that the Fed would continue to gradually raise interest rates. Lawmakers appeared satisfied with current monetary policy, but Powell did face some pointed questions regarding the escalating trade war, which has raised concerns that economy could take a downturn if the tariff battles continue. Still, consumer spending remains strong, the labor market is close to full capacity and inflation continues to move close to the Fed target of 2.0 percent. The Fed is widely expected to raise interest rates twice in the second half of the year, starting with a hike in September.

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