Gold price extends downside as US Dollar, yields recover ahead of Powell speech

• Gold price drops to a near two-week low as investors channel funds into the US Dollar and bond yields rise.

• Geopolitical tensions stay more or less unchanged fading the appeal of Gold.

• Fed’s Kashkari acknowledges the need for more work to control inflation.

Gold price (XAU/USD) drops further as safe-haven demand diminishes amid no further escalation in geopolitical tensions. A recovery in the US Dollar and long-term bond yields further weigh on the precious metal.

The downside move in Gold, however, may be short-lived as investors see an end to the Federal Reserve’s (Fed) rate-tightening campaign, due to gradually easing consumer inflation and higher Treasury yields, which have tightened financial conditions significantly. Commentary from Federal Reserve Chairman Jerome Powell on Wednesday could drive further action in the US Dollar and bond markets. Powell may give an idea of whether investors should expect more interest rate hikes this year to ensure a return of inflation to the Fed’s 2% target.

Fed Governor Lisa Cook said that the current interest rate policy is sufficiently restrictive to achieve price stability on Monday; Fed’s Kashkari, on the other hand, reportedly said the opposite in a Wall Street Journal article published on the same day.