Price of Gold Fundamental Daily Forecast – Underpinned by Falling Yields, Capped by Stronger Dollar

Gold futures are trading flat shortly before the regular session opening on Tuesday. The market is being underpinned by a drop in U.S. Treasury yields, while gains are being capped by a surge in the U.S. Dollar.

The price action suggests investors are positioning themselves ahead of Fed Chair Powell and Treasury Secretary Janet Yellen’s first joint appearance in front of the U.S. House Committee on Financial Services at 16:00 GMT.

At 11:12 GMT, June Comex gold is trading $1743.20, up $2.80 or +0.16%.

Treasury Yields Under Pressure

U.S. Treasury yields are trading lower on Tuesday morning, following prepared comments from Federal Reserve Chairman Jerome Powell for a congressional hearing, in which he warned the economic recovery was “far from complete.”

Powell and Treasury Secretary Janet Yellen are due to make their first joint appearance in front of the U.S. House Committee on Financial Services at 16:00 GMT, to discuss their response to the coronavirus pandemic.

In prepared remarks, released Monday afternoon ahead of the congressional meeting, Powell said that the economic recovery from the pandemic had “progressed more quickly than generally expected and looks to be strengthening.”

However, he said that the sectors of the economy hardest-hit by the pandemic “remain weak” and the unemployment rate “underestimates the shortfall,” so the recovery still had a long way to go.

US Dollar Firming Despite Drop in Rates

The U.S. Dollar crept back toward recent peaks on Tuesday as extended lockdowns in Germany and rising geopolitical tension turned investors cautious, while measures aimed at cooling New Zealand’s red-hot housing market hit the local currency.

The Turkish Lira was also under pressure, but the roughly 1% drop was nothing compared to its 7.5% dive on Monday after President Tayyip Erdogan sacked a hawkish central bank chief, but markets’ relief was offset by worries about fresh lockdowns in Europe.

Meanwhile, Germany is extending its coronavirus lockdown until April 18 and calling on citizens to stay home over Easter, while diplomatic ties strained after U.S. and European Union sanctions on China drew a backlash from both China and Russian.

Daily Forecast

In other news, traders will have the opportunity to react to a New Home Sales report for February at 14:00 GMT.

Later in the session, Fed Governor Lael Brainard is set to make a speech on the U.S. economic outlook and monetary policy at the National Association for Business Economics annual policy conference at 19:45 GMT.

For a look at all of today’s economic events, check out our economic calendar.