A weaker dollar makes greenback-priced bullion more attractive to buyers holding other currencies. [USD/]
Spot gold was up 0.2% at $1,841.13 an ounce by 0200 GMT, after largely muted trading on Monday. US gold futures firmed 0.1% to $1,842.90.
However, benchmark US 10-year Treasury yields rose, limiting zero-yield gold’s gains. [US/]
“The (gold) market is not moving because, after a historic week for global central banks, policymakers will have to explain the reasoning behind their decisions this week,” said Stephen Innes, managing partner at SPI. Asset Management.
Last week, the US Federal Reserve approved its largest interest rate hike in more than a quarter century in an attempt to stem a spike in inflation.
Fed Chairman Jerome Powell will deliver semiannual testimony on monetary policy to the Senate Banking Committee and the House Financial Services Committee later this week, Wednesday and Thursday, respectively.
“While the stock market does not expect Powell to reinvent the wheel of politics, we might expect him to reinforce the idea that the Fed is in data dependence mode. all interest rate sensitive risk assets will be subject to headline risk,” Innes said.
A series of surprise moves by some of the world’s biggest central banks, which are worried about runaway inflation, have left bond investors on the floor. Today, a growing chorus of investors is calling on policymakers to act quickly to end the uncertainty.
Although bullion is often seen as a hedge against inflation, rising interest rates and bond yields increase the opportunity cost of holding gold, which is not profitable.
Spot silver rose 0.5% to $21.68 per ounce, platinum climbed 0.7% to $937.88 and palladium gained 0.7% to $1,859.40.