Gold prices rose during Tuesday’s North American session following Federal Reserve Chair Jerome Powell’s appearance at the US Senate Banking Committee. Powell stated that while inflation is moving towards the Fed’s 2% target, the central bank is not yet ready to lower borrowing costs. As a result, XAU/USD traded at $2,364, gaining more than 0.25%.
The precious metal saw a slight recovery despite elevated US Treasury bond yields and a firm US Dollar. The yield on the US 10-year benchmark note climbed 1.5 basis points to 4.296%, while the US Dollar Index (DXY) held steady above the 105.00 mark, gaining 0.14%.
Powell emphasized that “elevated inflation is not the only risk we face,” cautioning that lowering interest rates too little or too soon could jeopardize the economy. He mentioned that while rate hikes are possible if supported by data, the more likely scenario would be to “begin to loosen policy at the right moment.”
In addition to Powell’s remarks, the World Gold Council (WGC) reported a second consecutive month of inflows into Gold exchange-traded funds (ETFs) in June. The WGC noted that total fund holdings increased by around 18 tonnes to 3,106 tonnes. This trend contrasts with the People’s Bank of China (PBoC), which did not purchase gold in June, holding 72.80 million troy ounces by the end of the month.
Looking ahead, the US economic docket for the week includes Powell’s speech at the US House of Representatives on Wednesday, followed by the release of inflation figures on both the consumer and producer fronts. Initial Jobless Claims and the University of Michigan Consumer Sentiment index will also be released, providing further insights into the economic landscape.
Gold prices continue to navigate the complex interplay of economic policy, market conditions, and geopolitical developments, with investors closely monitoring upcoming economic data and central bank communications.
