• XAU/USD has chopped either side of the $1800 level in recent trade.
  • Gold prices and broader financial markets await comments from Fed Chair Powell on recent bond market moves.

Spot gold prices have been choppy in recent trade amid an uptick in trading volumes at the start of the US trading session and as Fed Chair Jerome Powell begins the first day of his semi-annual testimony to Congress. His statement to Congress was released last Friday and contained no surprises; markets are instead focused on anything he might have to say regarding recent moves in the US bond market when speaking off the cuff in the Q&P session. More specifically, real yields have surged as markets have brought forward their expectations for the Fed’s first-rate hike; a 70% chance is now assigned to the Fed hiking rates by the end of 2022, a challenge to the Fed’s current guidance which says there will be no hikes through 2023. Thus, Powell may want to push back on market pricing in some regard.

XAU/USD slipped below the $1800 level shortly after the US equity cash open, but has since recovered back above as market wait with bated breath for what Powell will say in the Q&A. The stronger US dollar on account of a broadly risk-off market tone (US stocks have been on the slide led by a drop in Big Tech names and Tesla) seems to have weighed somewhat on gold prices. Strong US Consumer Confidence numbers for February and faster than expected house price inflation in December, according to S&P/Case Shiller, have both been largely shrugged off. Right now, spot gold is about 0.2% lower and trading just above the $1800 level.