Gold prices recovered slightly in the North American session on Wednesday (2/12). Federal Reserve (Fed) Chairman Jerome Powell said that policy needs to remain tight as inflationary pressures increase and US President Donald Trump's tariff threats escalate. XAU/USD is trading at $2,897, almost unchanged.

The non-yielding metal halted its downtrend after the US Bureau of Labor Statistics (BLS) revealed that inflation jumped above 3% in the United States, indicating that the Fed's pause in its easing cycle could be longer than expected.

Last week, December federal funds rate futures showed that traders expected an easing of 40 basis points (bps). Following the CPI, expectations were adjusted to just 30 bps of rate cuts by the end of the year.

US Treasury yields and the greenback reacted to the rise. However, the US Dollar (USD) lost some steam and erased its post-CPI gains, settling at 107.98, almost unchanged as reflected by the US Dollar Index (DXY).

Earlier, Fed Chair Jerome Powell concluded his testimony in the US House of Representatives. He said that the job of tackling inflation is not done, adding, "So we want to keep policy tight for now."

Atlanta Fed President Raphael Bostic echoed some of his words, saying that if the economy develops as expected, inflation could reach 2% by 2026. Chicago Fed President Austan Goolsbee added that some inflation readings like the one in January would ratify that "the job is clearly not done."(Newsmaker23)

Source: FXstreet