Gold futures are under pressure for a second session on Tuesday as the U.S. Dollar tested a 16-month high against a basket of major currencies and Treasury yields continued to firm on expectations that U.S. interest rates will rise in mid-2022. The move was cemented by the renomination of Federal Reserve Chairman Jerome Powell on Monday.
At 11:23 GMT, February Comex gold futures are trading $1798.50, down $10.60 or -0.59%.
Biden Hopes Powell Can Guide U.S. Economy to Full-Recovery
U.S. President Joe Biden on Monday nominated Federal Reserve Chair Jerome Powell for a second four-year term, positioning the former investment banker to continue the most consequential revamp of monetary policy since the 1970s and finish guiding the economy out of the pandemic crisis, Reuters reported.
Lael Brainard, the Federal Reserve board member who was the other top candidate for the job, will be vice chair, the White House said.
“We’ve gone from an economy that was shut down to an economy that’s leading the world in economic growth,” Biden said in remarks at the White House with the nominees.
Citing Powell’s “steady leadership” that calmed panicked markets, and his beliefs in monetary policies that support maximum employment, Biden said “I believe Jay is the right person to see us through.”
Treasury Yields Slightly Higher Early Tuesday
Ahead of the regular session opening, U.S. Treasury yields are inching higher on Tuesday morning, as investors continued to digest the news that Jerome Powell had been renominated to the role of Federal Reserve chair.
Yields are moving higher on reinforced expectations that the Fed, led by Powell, will continue on its current path of pulling back emergency stimulus measures. This move has been supported recently by at three Federal Open Market Committee members.
On Tuesday, Markit’s November flash purchasing managers’ index is due out at 14:45 GMT. Trader are looking for a reading of 59.3, up from 58.4. The November flash services PMI is expected to come in at 59.1, up from 58.7.
Traders are expected to show a limited response to these reports since the focus for investors has shifted from economic growth to the Fed’s tapering pace and the timing of the first post-pandemic rate hike.
Our technical work indicates that $1781.00 to $1757.10 is the primary downside target of this sell-off. Look for profit-taking and some new buying on a test of this area.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire