Gold prices are in free fall in response to the announcement of Jerome Powell's nomination as Fed Chair. In addition, the strengthening US Dollar also put pressure on gold prices.
Gold prices fell in the trading session Monday (22/November) tonight.
At around 12:24 GMT, spot gold was still around 0.2% lower at $1,841.20 per ounce.
On the Comex New York, gold futures prices also declined 0.6% to $1,841.30.
However as of this writing, the XAU/USD chart shows the gold price has fallen deeper, reaching 1.47% to $1,818.25, returning to its November 8 low.
US President Joe Biden has re-nominated Powell as chairman of the Fed for a second term.
While the position of vice chairman of the US central bank was nominated for Lael Brainard who currently serves as a member of the Fed's Board of Governors.
The appointment of Powell as the number one person in the US central bank weakened the price of gold, because the market considered that the chairman of the Fed, who was appointed by Donald Trump, had a hawkish sentiment.
While Brainard, considered more dovish.
The nomination is yet to be confirmed in the Senate before Powell and Brainard resume work in February 2022.
"And gold could show some recovery if Lael Brainard is appointed as the next Fed chair because he's more on the dovish side," said Xiao Fu, an analyst at Bank of China International, before news of Powell's nomination was released.
Bullish US Dollar Prevents Gold Price Rise
On the other hand, the strengthening US Dollar narrowed gold's move to advance.
Although gold is considered the safest asset in the face of high inflation, the increasing chance of the Fed's Rate Hike has become an obstacle in itself.
"Gold is getting support from rising inflation... but the market should be concerned about how the Fed is dealing with that problem. If they are going to increase their efforts (accelerate the tapering rate), then gold could weaken in the short term," said Ole Hansen at Saxo Bank. He added that a break below the $1,830 level could widen the risk for gold to fall back to $1,800.
Over the past week, Fed officials have increasingly signaled an acceleration in the rate of tapering.
Including Fed Vice Chair Richard Clarida, who will be replaced by Lael Brainard.
Clarida said that she will be closely watching US economic data between now and the FOMC meeting in December, and did not rule out the committee to start talking about accelerating monetary tightening next month.
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