Gold prices fell on Tuesday, headed for a second loss in a row, with investors eager to glean fresh insights in congressional testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen later in the session.
The regulators are set to provide the first of two days of testimony about the health of the U.S. economy as America wrestles with the impact of the COVID-19 pandemic when they speak at 12 p.m. ET.
Optimism about the speed of the recovery from the pandemic and the possibility of rising inflation have left investors skeptical about the Fed’s plans for interest rates and bond purchases. That has made Powell and Yellen’s testimony a more highly anticipated event as investors reassess their expectations for a fast and widespread global recovery.
Powell and Yellen will testify on the “expected impact of the stimulus bill, but also talk about the next large spending bill, rumored at $3 trillion for infrastructure,” Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch.
In remarks released Monday, Powell said the U.S. economy has recovered more quickly than generally expected and “looks to be strengthening,” but the recovery is far from complete, The comments are part of the testimony to be delivered Tuesday to a House Financial Services Committee hearing.
A number of additional Fed Governors are also speaking on Tuesday, with Robert Kaplan of the Dallas Fed on Tuesday painting “a more hawkish tone, indicating bond yields are not finished rising in the short term,” said Wright. “This alone regarding bond yields has weakened gold and strengthened the U.S. dollar” in Tuesday dealings.
The the majority of Fed officials don’t see a benchmark interest rate hike until after 2023. The latest Fed “dot plot” of benchmark interest rate forecasts showed four officials expect the first hike next year and seven see lift-off by 2023. Kaplan said he was one of those four.
Read: Dallas Fed’s Kaplan says he sees first interest rate hike next year
Gold for April delivery
GCJ21,
Meanwhile, May silver
SIK21,
Trading in the precious metals come as the 10-year Treasury note yield
TMUBMUSD10Y,
However, a strengthening of the U.S. dollar created headwinds for bullion, making the dollar-pegged asset more expensive for overseas buyers. The dollar was up 0.5%, as measured by the ICE U.S. Dollar Index
DXY,
Wright said he is “still bullish on gold rebound over the longer term if a mega $3 trillion bill gets through Congress but in immediate term, gold is being influenced by 10-year bond yields” and the anticipated rise in interest rates sooner than most people expected.”
Among other Comex metals, May copper
HGK21,
