Gold futures headed lower Tuesday, with commodity investors keeping an eye on congressional testimony by Federal Reserve Chairman Jerome Powell scheduled for later in the session.
Powell will testify before the House select subcommittee on the coronavirus pandemic at 2 p.m. Eastern, a halfhour after gold futures on Comex settle for the session.
Tuesdays remarks will be the central banks first since last Wednesday when he acknowledged that policy makers had started to discuss the eventual reduction of the Feds monthly bond purchases.
The Fed last week surprised markets at its policy meeting by revealing policy makers now expect two interest rate increases by the end of 2023, earlier than previously anticipated.
In prepared testimony, Powell said that the Fed will do everything we can to support the economy for as long as it takes to complete the recovery.
Powells prepared testimony highlights inflation and reiterates the not uniformly agreed to concept of transitory inflation in nature, said Jeff Wright, chief investment officer at Wolfpack Capital. Gold is softer given uncertainty in timing for a future Fed response.
The issue for gold is transitory inflation is not an objective measurement and widely open to interpretation, explained Wright. The response of higher rates from Fed is most direct response to curb inflation, but difficult to pin point when the Fed will begin this process first with tapering asset purchases and then actually raising rates; most likely…