Gold prices pull back as investors await economic reports, Powell testimony – MarketWatch

Gold futures were retreating from a 13-month peak on Wednesday as Russia’s siege of Ukraine was in its seventh day and as investors awaited the first of two days of congressional testimony from Federal Reserve Chairman Jerome Powell.

Trade in the morning follows President Joe Biden’s State of the Union address where the U.S. leader vowed to isolate Moscow and combat inflation, which has surged in the aftermath of the COVID-19 pandemic.

Powell is expected to speak to pricing pressures and the central bank’s efforts to battle it in front of the House. He might point to the rate of interest rate increases that investors can expect, with anticipation that benchmark federal-fund rates is set to begin to rise at the Fed’s monetary-policy gathering March 15-16.

At last check, April gold GCJ22, -0.61% GC00, -0.61%  was trading $15.70, or 0.8%, lower at $1,928.10 an ounce, after a 2.3% gain on Tuesday, taking bullion to the highest most-active contract finish since January 2021.

Soaring commodity prices are seen adding fuel to inflation already running at a nearly 40-year high, but have also sparked fears of an economic slowdown, clouding the outlook for the Fed.

Reduced expectations for larger interest-rate increases also has helped to bolster gold somewhat.

Market-based predictors were showing a less than 4% chance the Fed would raise interest rates by 50 basis points, or half a percentage point, when policy makers meet later this month. That’s down from 34% a week ago, according to the CME FedWatch tool. The market is now pricing in a 96.3% chance of a quarter-point increase and a 3.7% chance of a half-point rise.

Commodity traders also are watching for private-sector employment data from Automatic Data Processing due at 8:15 a.m. Eastern Time, ahead of the more closely followed Labor Department nonfarm payrolls report on Monday.