[Click here for an interactive chart of gold prices]
Meanwhile, benchmark US Treasury yields gained for a fourth consecutive day to hit a more than three-month peak. The dollar index rose 0.3%, making gold more expensive for holders of other currencies.
The rise in the 10-year Treasury yield “provides a massive headline for gold, as it reduces its attractiveness,” and the metal looks poised to decline further towards $1,730, said Commerzbank analyst Carsten Fritsch in a Reuters report.
Market sentiment therefore remains downbeat with continued ETF outflows and investors are “not very optimistic about prospects for gold,” he added.
Investors will now closely monitor for policy cues from Powell’s congressional testimony, where he is expected to address concerns about longer-than-expected inflation pressures. The Fed chair recently said the central bank would act against unchecked inflation if needed.
Chicago Fed President Charles Evans on Monday said that he expects inflation to rise to 2.4% by 2024, but interest rates will only be on a “gentle incline” upward.
“This concern about more persistent inflation also appears to be becoming a much more consistent theme of central bankers’ discourse, with a number of Fed speakers yesterday coming across a little more forcefully when it comes to the start of tapering,” CMC Markets UK’s chief market analyst Michael Hewson said.
(With files from Reuters)
