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Gold futures traded lower early Tuesday as traders awaited the first of two days of congressional testimony by Federal Reserve Chairman Jerome Powell.
Traders are eager for any clues to the size and scope of future interest rate increases as the Fed continues its battle to rein in inflation.
Price action
-
Gold for April delivery
GCJ23,
-0.58%
fell $8.30, or 0.4%, to $1,846.30 an ounce on Comex. -
May silver
SIK23,
-0.76%
fell 16 cents, or 0.8%, to $20.985 an ounce. -
April platinum
PLJ23,
-1.60%
was down 1.2%, at $966.60 an ounce, while June palladium
PAM23,
-0.42%
shed 0.7% to $1,414.50 an ounce. -
April copper
HGJ23,
-1.34%
declined 1.3% to $4.035 a pound.
Market drivers
Powell is scheduled to appear before the Senate Banking Committee at 10 a.m. Eastern to deliver the Fed’s semiannual monetary policy report. He will testify before a House panel on Wednesday.
Traders and investors will pay close attention to Powell as markets attempt to get a grip on how high the Fed will take interest rates — and how fast.
The Fed ratcheted up rates rapidly since March of last year. Over the past month, investors who had previously doubted the Fed’s forecast for a peak in the fed-funds rate above 5% changed their tune, while also largely pricing out expectations for rate cuts by year-end.
See: Powell to talk to Congress about the possibility of more interest-rate hikes, not fewer
Treasury yields had retreated early in the year, while the U.S. dollar softened, allowing gold to rally. But those moves were reversed in February.
“The gold market’s focus remains squarely on the ebb and flow of monetary policy expectations, and the resulting movements in interest rates and the dollar,” said Peter Grant, senior metals analyst at Zaner Metals LLC and Tornado Precious Metals Solutions, in a note.
“However, if it becomes evident that rate hikes alone can’t contain inflation, gold may rally on flight to quality in anticipation of stubborn inflation and heightened risks of a recession,” he wrote.
Read: What stock-market investors want to hear when Fed’s Powell testifies before Congress this week
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