Gold Futures Settle Sharply Lower As Dollar Climbs After Powell's Testimony
Gold futures settled lower on Tuesday as the dollar climbed higher after Federal Reserve Chair Jerome Powell said the central bank will likely raise interest rates higher than earlier thought to fight inflation.
Citing stubbornly elevated inflation and stronger than expected economic data, Powell said during his semiannual monetary policy testimony before the Senate Banking Committee that “ultimate level of interest rates is likely to be higher than previously anticipated.”
Powell also said the Fed would be prepared to reaccelerate the pace of rate hikes if the totality of incoming data were to indicate that faster tightening is warranted.
Additionally, the Fed chief reiterated the central bank will likely need to maintain a restrictive stance of monetary policy for “some time” in order to restore price stability.
The dollar index climbed past 105.50, gaining more than 1%.
Gold futures ended lower by $34.60 or about 1.9% at $1,820.00 an ounce, the lowest settlement since February 24.
Silver futures ended down $0.936 at $20.199 an ounce, while Copper futures settled at $3.9750 per pound, down $0.1135 from the previous close.
A report released by the Commerce Department showed wholesale inventories in the U.S. decreased in line with economist estimates in the month of January.
The report said wholesale inventories fell by 0.4% in January after inching up by 0.1% in December. The drop matched expectations as well as the preliminary estimate.
The decline by wholesale inventories came as inventories of non-durable goods slumped by 0.9% for the second straight month, while inventories of durable goods edged down by 0.1% in January after climbing by 0.7% in December.
Meanwhile, the report said wholesale sales jumped by 1% in January after slipping by 0.2% in the previous month.
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