By Gina Lee
Investing.com – Gold was up on Wednesday morning in Asia, close to a one-week high reached during the previous session, due to a weaker and comments by U.S. Federal Reserve Chairman Jerome Powell that the U.S. economy is still on the road towards recovery from COVID-19.
edged up 0.12% at $1,808.10 by 12:10 AM ET (5:10 AM GMT), climbing above the $1,800 mark.
Powell testified before the U.S. Senate Banking Committee on Tuesday that monetary policy still needed to be accommodative with economic recovery “uneven and far from complete”.
Some investors were optimistic about gold’s prospects.
“Powell was just credible åçenough on his dovishness… so gold had more room to breathe,” Axi chief global market strategist Stephen Innes told Reuters,
A weakening dollar was also supporting price, with the dollar down on Wednesday. As benchmark ten-year U.S. Treasury yields drop, gold will continue to react to the moves in bond yields in the short term, Axi’s Innes added.
Powell’s remarks are an indication that “the stimulus trade is unlikely to go away anytime in the next six months,” with a depreciation in the dollar and potential impact of inflation as a result of stimulus measures key drivers for gold, AirGuide director Michael Langford told Reuters.
Investors are waiting to see whether the U.S. Congress will pass a $1.9 trillion COVID-19 proposed by U.S. President Joe Biden later in the week.
Other precious metals also posted gains, as silver rose 0.4%, platinum climbed 0.8% and palladium added 0.1%.
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