Gold rallied higher at the mid-week trading session as the precious metal’s buyers got assurance from the U.S. Federal Reserve Chair, Jerome Powell, that inflation will be tamed.
Gold prices of late have witnessed significant selling pressure; it was unable to ward off a rallying USD. Gold fell as the U.S dollar index tipped above yesterday’s highs.
At the time of writing this report, Gold futures were up by 0.34% to trade at $1,730.90 an ounce. The U.S dollar, which usually moves inversely to the yellow metal, ticked up to a more than two-week high in the early hours on Wednesday.
Gold bugs got some amount of relief when the U.S. Treasury yields dropped after the U.S Fed told lawmakers on Tuesday that inflation was expected to rise over the course of 2021, but it would be “neither particularly large nor persistent.”
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on prevailing macros that could give the precious metal some relief in the near term amid strong support for the U.S dollar in the long term.
“Gold weakened as the US dollar rallied amidst positive comments from US Fed chair Powell and Janet Yellen. Both speakers to Congress had previously released their prepared remarks, which supported the long US dollar view.
“However, lower yields may support and even firm bullion over the short term once the US dollar safe-haven appeal ebbs.”