In the trading session on Wednesday (08/March) spot gold prices were flat at around $1,813.78 per ounce. Gold futures slipped by 0.1% to $1,817.80.

The XAU/USD edged up by 0.15% to $1,816.14, appearing to start stabilizing at a low following the previous sharp decline. The US.Dollar's rise, which is starting to calm down, gives gold room to stop the decline. 

The market began to make adjustments so that the price of gold and the US Dollar did not experience significant changes again. Earlier, the price of this precious metal plunged nearly 2%.

It was especially Fed Chairman Jerome Powell's very hawkish testimony. In a first-day testimonial yesterday, Powell said that the Fed will likely need to raise interest rates higher than expected.

50 Basis Point Raise may be Taken

The statement was done in response to recent solid United States. economic data. The US central bank will be prepared to act with greater measures if the "overall" of information later shows Certain condition. 

That condition is like stronger results so that inflation control policies must be tightened. Traders immediately raised expectations of the Fed's interest rate policy in response to Powell's remarks. 

Federal Reserve funds futures are now setting 66% expectations for a potential 50 basis point rate hike at the upcoming March 21-22 FOMC meeting. There is a huge possibility to run this policy. 

Next, the market's focus will be on the United States NFP data to be released on Friday this week. The price of gold tends to be difficult to rise rapidly amid the issue of rising interest rates. 

Gold Bullish Hopes On U.S. Economic Data 

However, the release of that American economic data, which could open a gap in the slowdown in interest rate hikes, is a great hope for bullish gold. 

There are still a number of risks that the gold market needs to absorb from other events. Powell today (His second day testimony), U.S. Employment data on Friday, and CPI on Tuesday.

It was said by Phillip Streible would is known as the chief market strategist at Blue Line Futures, Chicago. The analyst added that in the short term, the gold price is at the support level of $1,800. 

Gold's (potential) to be able to rally more on a dovish data outweighs the potential to fall on hawkish data that reaffirms Powell's comments. It was stated by Nicky Shiels, analyst at MKS PAMP SA.

Meanwhile, Dollar Is Corrected

The US dollar index (DXY) moved away from a high record of 105.88 in Wednesday's New York session (8/March). After the Fed Chairman shocked the market with a hawkish statement yesterday, market participants are still busy discussing the prospect of a future rate hike.

In his first day of testimony, Powell said that the Fed likely needs to raise interest rates higher than previously expected in response to recent strong economic data. 

The statement triggered market participants to raise the Federal Reserve ‘s interest rate projections going forward. Fed Funds Futures now showed a 66% chance of a 50 basis point rate hike.

That is at the Federal Reserve FOMC meeting on March 21-22, even though the odds were only 22% before Powell's testimony. Market projections for terminal interest rates also rose to 5.6% as of September. 

ADP nonfarm Employment Change Increased by 242k

The rise in projections triggered a rally in the United Stayed dollar in Tuesday's trading. However, some analysts think the market reaction is too much 

Besides that, they also think that Powell's testimonials today will not provide any new catalysts anymore. The ADP Nonfarm Employment Change report for February 2023, released tonight.

Again, it shows the resilient situation of the US labor market. The actual data increased by 242k where that is beyond the consensus estimate of only 200k. 

The data for the January 2023 period was also revised up from 106k to 119k. Market participants are now monitoring Powell's follow-up testimony in the U.S. Parliament tonight.