Gold futures post highest finish in nearly a week after Powell’s testimony

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Gold futures posted their highest in nearly a week on Tuesday, in line with comments from the Federal Reserve’s Jerome Powell, beating expectations of higher inflation and volatility in financial markets.

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Powell says the Fed can calm inflation without hurting the labor market

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In his confirmation hearing for a second four-year term as chairman, Powell said the central bank’s plan to raise interest rates should not crack the economy or damage the job market, essentially a ” soft landing”. a recession.

“As all markets turn to more bullish rhetoric from the Fed, I think Powell’s testimony served as reassurance that the central bank will not move too fast and take the health of the economy as its own. will be kept as a top priority.” Brian Lundin, editor of the Gold newsletter, told Businesshala.

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,“… Powell’s testimony assured that the central bank would not move too fast and would keep the health of the economy as its top priority.”,


— Brian Lundin, Gold Newsletter

February Gold GCG22,
+1.18%

GC00,
+1.18%
$19.70, or 1.1%, to $1,818.50 an ounce, with the most active contract entering the highest settlement since January 5. Gold settled in positive territory for the third time in a row – the longest string of gains since the seven-season stretch ended on November 12.

March Silver SIH22,
+1.53%

SI00,
+1.53%
After gaining 0.2% on Monday, it climbed 35 cents, or 1.6%, to $22.812 an ounce.

Bullion prices have risen despite the recent strengthening in government debt and dollar yields, which will typically serve as a headwind for a dollar-denominated commodity that does not offer coupons.

Chief Market Analyst Naeem Aslam wrote, “Despite more than 1.80% yield on 10-year Treasury notes, gold prices are rising as it is considered a hedge against inflation and investors expect inflation to pick up in the coming months as well. are doing.” AvaTrade, in a daily research report.

Bullion is viewed as a hedge against inflation and has traditionally been regarded as a safe-haven asset.

On Tuesday, the 10-year Treasury note TMUBMUSD10Y,
1.746%
The yield was up 1.755%, down slightly from 1.779% at 3 p.m. Eastern time on Monday, while the dollar was down 0.3%, having changed little for the week so far, as measured by the ICE US dollar index DXY,
-0.39%,

The market is currently anticipating the Fed’s first rate hike in March and could begin shrinking its balance sheet shortly thereafter, Peter Grant, vice president and senior metals strategist at Zener Metals, said in a recent newsletter. .

If it does, “scope sees for the 10-year yield to test the 2% level in the near term, which should continue to provide support for the dollar and gains in gold above $1,800″. It is difficult to maintain,” he said.

Grant said the market will be closely watching inflation data this week. The December US consumer-price index is due on Wednesday and producer price data will be released on Thursday.

“Inflation is likely to remain warm, but stocks are already expressing their displeasure with the Fed’s new bullish tone,” Grant said. “It puts the Fed in a bit of a bind because they are already behind the curve after maintaining for too long that inflation was ‘transient’.”

“For now, a lower risk appetite for gold may provide some haven support, along with a willingness to mitigate those inflationary risks,” Grant said.

US benchmark stock indices moved higher on Tuesday along with the Dow Jones Industrial Average (DJIA).
+0.23%
Up 0.3% after falling about 0.5% on Monday.

Among other Comex metals, March Copper HGH22,
+1.71%
rose 1.8% to $4.429 per pound. April Platinum PLJ22,
+3.86%
March palladium PAH22, while tacked up 4.2% at $973.20 an ounce.
+0.25%
Up 0.7% at $1,922.10 an ounce.

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