- Spot gold is moving sideways on Tuesday as markets assimilated testimony as expected from Yellen, nominated for US Secretary of the Treasury.
- Spot prices per troy ounce have stalled around the $ 1,840 level.
- Gold investors focus attention on President-elect Joe Biden’s inauguration of the presidency on Wednesday.
The spot prices of the oro (XAU / USD) have moved within a narrow range for the most part on Tuesday, as markets took in what turned out to be expected testimony from US Treasury Secretary candidate (and former Fed chair) Janet Yellen. Spot prices per troy ounce have stalled around the $ 1,840 level and the precious metal is shaping up to end the day with modest gains of around 0.1%.
Gold investors focus attention on the inauguration of the president-elect of the United States, Joe Biden, to the presidency on Wednesday, which will be expected to obtain more information from the president-elect on his plans and agenda. Markets will also be on the lookout for any further political violence.
The US dollar has weakened (the DXY index has fallen back to 90.50 from the weekly highs near 91.00), real yields fell (10-year TIPS fell 1.3bp to -1.028% and 30-year TIPS fell 1.2bp to -0.285%) and inflation expectations rose on Tuesday, a typically bullish combination for gold. Given the above, it is perhaps surprising that the precious metal only gained 0.1% on the day.
The aforementioned higher changes in equilibrium inflation expectations combined with falling real returns mean that markets have interpreted Yellen’s generally dovish testimony as a good omen of the Treasury’s ability to deliver inflation-boosting stimulus while the Fed maintains an accommodative monetary policy. If this is the case, this should support spot gold prices, given its status as a hedge against inflation. Stock markets have certainly seemed to take it that way, with America’s four major exchanges rebounding in the wake of Yellen’s remarks.
Gold technical levels
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