(Bloomberg) – Gold slumped after two days of gains as investors waited for US Federal Reserve Chairman Jerome Powell to testify and weighed the prospect of a major US stimulus package nearing approval.
Powell’s semi-annual report on Tuesday and Wednesday in the Senate Banking Committee in the House Financial Services panel is being monitored for further policy guidance and his assessment of the recovery. Meanwhile, the House Budgets Committee pushed President Joe Biden’s $ 1.9 trillion Pandemic Act, paving the way for the lower chamber by the end of this week.
Bullion rebounds after falling 2.2% last week as traders return to focus on rising inflation expectations and potentially massive economic stimulus. Holdings of bullion-backed exchange-traded funds saw steady outflows, with the largest SPDR gold stocks posting their largest loss since November on Monday.
“Investors expect a major US stimulus package to be passed that could boost reflation and the inflation outlook,” said Margaret Yang, strategist at DailyFX. “Powell is likely to reiterate the Fed’s accommodative stance despite the rising inflation outlook. The weakness of the US dollar reflects the market’s expectation to deliver a cautious speech that will support gold.”
Spot gold fell 0.2% to $ 1,806.44 an ounce in London at 10:20 a.m. after rising 1.9% in two days. Silver, platinum and palladium all fell. The Bloomberg Dollar Spot Index has hardly changed.
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