Bullion Struggling Under Hawkish Fed Comments, Powell Speaks Again Later

Gold prices fell 1.8% m/m on Tuesday as Fed Chairman Powell not only said that rates are likely to peak at a higher rate than expected at the last meeting but another 50bp hike is possible. His comments were more hawkish than expected by markets and Treasury yields and the USD rose, and equities sold off. He speaks in front of the House later today and in anticipation gold is down another 0.2% during APAC trading. It is currently around $1810.55/oz, close to the intraday low of $1809.50 following a high of $1814.30 earlier.

• A close to 50bp hike is now priced in by markets for the March 22 meeting, which is negative for non-yielding gold. On the other hand, China increased its gold reserves for the fourth consecutive month in February. Asia has generally been increasing its holdings of bullion.
• Gold remains above the bear trigger of $1804.90, the February 28 low. But it is approaching its 100-day simple moving average.
• Later today Fed Chairman Powell appears before the House Financial Services Committee, Barkin speaks and the Beige Book is published. ECB President Lagarde also speaks. The Bank of Canada is expected to pause. Ahead of Friday’s US employment data, there is February ADP employment and also JOLTS vacancy data. US January trade data are also released.