Gold price climbed more than 1% on Friday, trimming some losses sustained during the week as the Fed’s hawkish rhetoric bolstered the greenback, which posted gains of 0.37%, per the US Dollar Index (DXY). At the time of writing, XAU/USD is trading at $1979.90, up daily 1.12%.

XAU/USD soars over 1% as Treasury Secretary’s remarks spark risk-off Impulse, US Dollar slips

XAU/USD bottomed at around $1954.14 as the Federal Reserve (Fed) Chair Jerome Powell delivered remarks at a conference on Friday. Fed Chair Jerome Powell indicated that inflation currently exceeds the target level and stresses the Fed’s unwavering commitment to guide inflation back towards the 2% target, asserting that “failure would cause greater harm.”. Furthermore, Powell noted the strength of the banking system and suggested that tighter banking credit conditions may prevent a potential rise in rates.

At the same time, a news headline that said that CNN reported that US Treasury Secretary Janet Yellen told bank CEOs on Thursday that more merges may be necessary after a series of bank failures spurred a risk=off impulse; hence, XAU/USD soared sharply.

Discussions about the US debt ceiling paused as the US House of Representatives leader Kevin McCarthy said. In contrast, the White House commented that a deal remains possible.

In the meantime, the US Dollar Index (DXY), a gauge of the buck’s performance against a basket of six peers, slides 0.30%, down at 103.017, what appears to be traders booking profits ahead of the weekend.

Nevertheless, raising US Treasury bond yields cut short the XAU/USD rally. The US 10-year benchmark note rate yields two and a half basis points at 3.673%.

Even though XAU/USD is cutting some of its weekly losses, it is on its course to lose 1.90% in the week after solid US Retail Sales, Industrial Production, and falling unemployment claims warrant further action by the Fed