As markets process Powell's most recent words, gold prices are unable to find direction.

After two straight sessions of increases, gold prices struggled to find direction on Wednesday as investors continued to analyze comments made the day before by Federal Chairman Jerome Powell as well as the impact on the U.S. dollar and Treasury yields.

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Although Treasury yields have increased, which lessens the relative attractiveness of the yellow metal, gold prices witnessed some increases early on Wednesday as the U.S. dollar weakened.

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Price Action

• Although it was trading below the session's high of $1,898.90, the price of gold for April delivery (GC00, 0.08% GCJ23, 0.08%) was up $1.20, or over 0.1%, to $1,886 per ounce on Comex.
• Silver for March delivery increased by 17.8 cents, or 0.8%, to $22.355 per ounce (SI00, 0.76%; SIH23, 0.73%).
• Platinum for April PLJ23, -0.39% increased $1.70, or 0.2%, to $987.90 per ounce, while palladium for March PAH23, -0.55% fell $7, or 0.4%, to $1,634.50 per ounce.
• The price of a pound of march copper HGH23, -0.89% dropped by 1.9 cents, or 0.5%, to $4.062.

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Market Drivers

Following Powell's comments during a question-and-answer session at the Economic Club of Washington, D.C., gold experienced some support.

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Powell restated his belief that the Fed will continue to raise interest rates and that the central bank won't start cutting rates until at least next year. However, he also repeated his assertion from last week that disinflation is already in progress. Although U.S. markets fluctuated between gains and losses throughout Powell's talks, they ended the day higher on Tuesday, indicating that investors thought Powell's statements were dovish.

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According to Rupert Rowling, a market analyst at Kinesis Money, "the gold market seems to have an element of traders and investors hearing what they want to hear rather than what is said as the Fed Chair said on Tuesday that further interest rate hikes are needed to fully curb inflation, but his tone was interpreted as less aggressive than previous reasons for gold to gain."

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However, gold prices have backed off from the session's top points and briefly entered the negative zone.

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While investors continue to process the Fed chairman's statement, which "actually sparked a rough ride for the dollar index," prices for the yellow metal are likely to stay erratic, according to Naeem Aslam, the chief market analyst at AvaTrade.

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Following little loss on Tuesday, the ICE U.S. Dollar index DXY, -0.02% was little changed at 103.42 on Wednesday.

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The dollar index has further opportunity to rise since "many in the market are now anticipating a likelihood that we may see more than one interest rate hike of 25 basis points" from the Fed, according to Aslam. Any increase in the dollar index's strength essentially poses a challenge to gold bulls who believe that the dollar index's heyday has long since passed.

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The current narrative, he added, "may completely alter if inflation numbers do reflect a stronger performance."

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This week, more Fed representatives are expected to speak. Aslam predicted that traders would pay close attention to the Fed speeches.

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Although they will "create more noise in the market," their opinions "would not matter that much currently especially given that we heard from the Fed chairman only last night."

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According to Aslam, "any additional hawkish comments might force the gold price to retest its support at $1,850, while any dovish comments may aid in the process of gold prices rising higher and may retest the price of $1,900."