Gold recovered slightly in late trading on Wednesday as Fed Chairman Jerome Powell said policy should remain restrictive as inflationary pressures mount and Donald Trump's tariff threats become more aggressive.
At 9.25am, gold was at $2,901.71, unchanged since it opened early Thursday in Asian trading.
However, the yellow metal capped its decline after the US Bureau of Labor Statistics (BLS) revealed that inflation had surged above 3% in the United States, prompting the Fed to pause its policy easing for longer.
Last week, the December Fed funds rate futures contract showed that the market was expecting a 40 basis point easing.
After the CPI report was released, that expectation was now reduced to 30 basis points by the end of the year.
US Treasury yields and the US dollar, which reacted to rising commodity prices, lost confidence to 107 points after the inflation report.
In addition, Atlanta Fed official Raphael Bostic said he believed that if the economy develops as expected, inflation could move to 2% by 2026.
Chicago Fed President Austan Goolsbee added that a heating up of inflation readings like January would make the Fed's job even harder this year.
