According to Kitco, spot gold prices fell 0.8%, down to $3,318.19/ounce at-827 GMT, after reaching a record $3,357.4/ounce in the previous session. Gold has been up 2.5% since the start of the week. Meanwhile, US gold futures fell 0.5% to $3,330.5 an ounce.
Ross Norman - an independent analyst commented: "It is possible that the price reversed after reaching a peak due to some investors taking profits. The slight increase in the USD also partly reduces the attraction of gold. However, the discounts were quickly bought in, showing that market sentiment is still very positive".
The US dollar index recovered slightly after hitting its lowest level in nearly 3 years, making gold more expensive for buyers in other currencies.
Gold prices have previously risen sharply by 3.6% on Wednesday after US President Donald Trump called for an investigation into the possibility of imposing tariffs on all important imported minerals, in addition to reviews of drugs and semiconductor chips.
Federal Reserve Chairman Jerome Powell said the agency will wait for more data before adjusting interest rates, while warning that Trump's tax policies could cause inflation to deviate from the Fed's target.
Jerome Powell spoke more openly than usual about the new administration and the impact of its policies in his speech at the Chicago Economic Club on Wednesday afternoon.
Powell said that in 2024, the US economy will grow by 2.4%, the unemployment rate will remain at about 4%, close to what is considered "all-inclusive labor force". Inflation has also decreased, to about 2.5% by the end of the year. That is the time when the economy is operating relatively stably.
However, he warned that the new administration is now implementing many new policies, especially in trade, which could cause the US economy to deviate from employment and price control targets. He predicted that the unemployment rate will increase due to economic stagnation, while inflation could also increase due to the impact of import taxes - a part of this cost will eventually fall on consumers' shoulders.
Mr. Powell emphasized that the FED's goal is always to maintain maximum employment and stabilize prices. But with the current situation, he said that in the rest of the year, the Fed may find it difficult to achieve those two goals, or at least no further progress.
He also reiterated the lesson from the pandemic, supply chain disruptions are often prolonged and cause much more persistent inflation than usual price shocks. For example, the lack of chips during the pandemic has caused a shortage of cars despite high demand, thereby prolonging the period of price increases. Currently, the supply chain in the auto industry continues to be at risk of disruption, and that could lead to further inflation for a few more years.
Gold is often seen as a hedge against inflation, and tends to increase in a low-interest-rate environment.
Carsten Menke - an expert at Julius Baer - said: "The market is currently thinking that no matter the scenario, gold will still benefit".
However, physical demand for gold in India is still weak this week due to price increases being too hot, while in China, the price difference remains stable.
Norman warned: The fact that traditional gold buyers are less involved in the rally this time could be a sign that the market is about to peak. But there is no reason for gold to fall so low at the moment, except for the technical factor of overbought prices.
Spot silver prices fell 1.2% to 32.37 USD/ounce, platinum fell 0.6% to 961.10 USD/ounce, while palladium fell sharply by 2.5% to 948.01 USD/ounce.
