The Fed’s sudden hawkish shift last week continued acting as a tailwind for the US dollar and turned out to be a key factor that weighed on dollar-denominated commodities, including gold.
That said, the downside remains cushioned, at least for the time being, as investors now seem reluctant to place any aggressive bets ahead of the Fed Chair Jerome Powell’s testimony before the House Select Subcommittee.
His comments will now be looked upon for fresh clues on the pace of the US economic recovery from the pandemic and the Fed’s near-term monetary policy outlook.
A renewed uptick in the US Treasury yields also weighs on the non-yielding gold, as markets reprice the Fed’s tightening expectations amid resurfacing inflation debate and last week’s hawkish shift.
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