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Gold Futures Settle Lower As Powell Hints At Aggressive Rate Hikes

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Gold prices drifted lower on Tuesday as bond yields moved up and the dollar stayed reasonably firm against its peers after Fed Chair Jerome Powell hinted at a more aggressive tightening of monetary policy than previously anticipated.

The dollar’s decline from the day’s high helped limit gold’s losses. The dollar index, which rose to 98.97 in the Asian session, fell to 98.32 in the New York session before recovering to 98.52, netting a small gain.

Gold futures for April ended lower by $8.00 or about 0.4% at $1,921.50 an ounce, recovering from a low of $1,909.80 an ounce.

Silver futures for May ended down by $0.409 at $24.904 an ounce, while Copper futures for May settled at $4.7000 per pound, down $0.0105 from the previous close.

“We will take the necessary steps to ensure a return to price stability,” Powell said in remarks to the National Association for Business Economics on Monday.

“In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at upcoming meetings, we will do so.”

He added, “And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”

After Powell’s remarks, CME Group’s FedWatch Tool is currently indicating a 33.9% chance the Fed will raise rates by 25 basis points in May and a 66.1% chance of a 50 basis point rate hike.

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