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Gold prices edged lower on Tuesday as a firmer dollar outweighed a dip in U.S Treasury yields, ahead of testimony from Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen.
Spot gold fell 0.7% to $1,727.46 per ounce by 11:31 A.M EDT (1531 GMT). U.S. gold futures fell 0.7% to $1,725.90 per ounce.
“We see a tenuous gold market on the premise that depending on the given day we see forces pushing or pulling in either direction,” said David Meger, director of metals trading at High Ridge Futures, adding a gaining dollar, amid hopes of an economic recovery, was keeping bullion pressured.
The dollar rose 0.5% against rivals, while U.S. benchmark Treasury yields dipped. A stronger greenback raises the cost of holding bullion for other currency holders.
However, the Fed‘s signalling of low-interest rates and the likelihood for further fiscal stimulus were capping the metal’s losses and gold could draw further support from a potential resurgence in COVID-19 cases and waning economic optimism that would hurt yields, Meger added.
Caution also set in ahead of Congressional testimony by Powell and Yellen at 1600 GMT, with investors searching for clues on the likely direction the U.S. central bank will take after it reiterated a pledge to keep interest rates low last week.
“Should investors see more runway to challenge the Fed’s outlook and push yields higher, that surge is likely to come at the expense of gold’s upside,” said FXTM market analyst Han Tan.
“Gold has all to do to break out of its current downward trend, especially with the recovering dollar standing in its way. Spot gold has to first break above its 50-day simple moving average in order to send a favourable signal to bullion bulls.”
Among other precious metals, silver fell 2.4% to $25.17 and platinum dropped 0.6% to $1,176.42 , while palladium rose 0.2% to $2,619.89.