Gold prices steady as bond yields hold higher, U.S. dollar firms

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Futures for gold on Tuesday traded virtually unchanged but were holding near the highest prices in a week ahead of important testimony from Federal Reserve Chairman Jerome Powell, which could provide further guidance to a market contending with a steady rise in yields on the prospects of a sharp recovery from the COVID-19 pandemic.

Powell, at 10 a.m. Eastern, is set to begin the first of two days of congressional testimony. The Fed chief has previously emphasized the central bank’s determination to hold off on pulling back on monetary stimulus until inflation has surpassed its target of 2%, but investors may be eager to hear what plans are for policy makers if a rise in rates undermine efforts to keep monetary policy accommodative.

“The marketplace is looking forward to Powell’s testimony on U.S. monetary policy to the Senate Banking Committee on Tuesday morning,” said Jim Wyckoff, senior analyst at, in a daily note.

“The marketplace will be especially keen to hear what Powell has to say about rising U.S. Treasury yields and the prospects for rising inflation,” wrote the metals analyst. “The stock market has turned wobbly early this week due in part to worries about rising bond yields starting to pull away investor money from the stock market,” he wrote.

The 10-year Treasury note yieldBX:TMUBMUSD10Y has been steady at 1.369%, but government bond yields have been resurgent on the back of higher growth expectations driven by falling COVID-19 case counts, vaccine rollouts and anticipation of another fiscal relief program.

Gold has drawn bids in this environment because investors are worried about the impact a rapid rise of yields will have on appetite for assets perceived as risky, notably those in the highflying technology sector which tend to be more vulnerable to higher borrowing costs amid what many consider lofty valuations.

On Tuesday, April gold GC00, -0.44% GCJ21, -0.44% was trading 60 cents, or less than 0.1%, lower at $1,807.80 an ounce, following a surge of 1.7% to mark its loftiest settlement since Feb. 12 and the biggest single-session dollar and percentage rise since early January, according to Dow Jones Market Data.

Meanwhile, March silver SI00, -1.87%   SIH21, -1.87% shed 16 cents, or 0.6%, to trade at $27.93 an ounce, following a surge of over 3% to the highest finish since Feb. 1 for gold’s sister metal.