Gold pressured at key levels despite weakened US dollar

Financial markets were focusing on the Fed Chairman Powell’s testimony. Gold retreated on Wednesday even as the US dollar fell and bond yields climbed. The Gold Index declined from the $1,939.57 high to the $1,919.24 low.

Markets were reacting to the congressional testimony from Federal Reserve chair Jerome Powell on Wednesday ahead of the Senate on Thursday. Treasury yields were mixed after the beginning of Powell’s comments before the House Financial Services Committee, bearish for gold which offers no interest.

The Fed had left interest rates unchanged at its June meeting, so there was an emphasis on that as to why in the face of inflation. Powell told lawmakers the fight against inflation still “has a long way to go” and that despite a recent pause in interest rate hikes officials agreed borrowing costs would likely need to move higher.

Powell said it may make sense to still raise rates at a more moderate pace. As a consequence, investors broadly expect rate hikes to resume at the Fed’s July meeting.