Gold Holds Gain With Powell’s Testimony, Stimulus in Focus

Gold Holds Gain With Powell’s Testimony, Stimulus in Focus

Gold held an advance as investors awaited testimony from Federal Reserve Chair Jerome Powell, and weighed the prospect of a large U.S. stimulus package moving closer to approval.

Powell’s semi-annual report at the Senate Banking Committee Tuesday and the next day at the House Financial Services panel will be monitored for further policy guidance and his assessment of the recovery. Meanwhile, the House Budget Committee President Joe Biden’s $1.9 trillion pandemic-relief legislation, setting it pass the lower chamber by the end of this week.

Bullion is rebounding after a 2.2% drop last week as traders refocus on rising inflation expectations and the potentially massive economic stimulus. Gold’s gains on Friday and Monday came even as benchmark Treasury yields rose to a one-year high, diluting the appeal of the non-interest-bearing asset. Holdings in bullion-backed exchange-traded funds have also seen steady outflows.

“Investors are anticipating a large U.S. fiscal stimulus bill to be passed, which may strengthen the reflation theme and inflation outlook,” said Margaret Yang, a strategist at DailyFX. “Powell is likely to reiterate the Fed’s accommodative stance despite the rising inflation outlook. The weakness in the U.S. dollar is reflecting the market’s expectation of a dovish-biased speech, which will be supportive to gold.”

Spot gold rose 0.1% to $1,811.50 an ounce by 6:57 a.m. in London, after rising 1.9% over two days. Silver, platinum and palladium all fell. The Bloomberg Dollar Spot retreated for a fourth day.

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