Gold increased in Asia in the early hours of Tuesday morning, but still remained within its lowest level for over two weeks. Speculation surrounding interest rate increase continued to grow as Joe Biden suggested Jerome Powell for a second term as Federal Reserve Chairman.
Gold futures edged up 0.11% to $1,808.03 4:31 AM GMT after crashing 2.1% to their lowest level since Nov 5. The dollar, which has an inverse relationship with gold, slightly increased on Tuesday.
The U.S president nominated Jerome Powell for a second four-year term on Monday over Lael Brainard, who was recently promoted to Fed vice-chair. However, Powell and Brainard’s roles will require confirmation from the Senate.
According to Stephen Innes a partner at SPI Assets “There isn’t going to be any sudden hawkish shift due to the nomination, but a continuation to current policy with a quicker asset tapering tabled by officials last week,”
On the other hand, investors also continue to monitor the surging numbers of COVID-19 cases in Europe. However, Governor of the Bank of France Francois Villeroy de Galhau said on Monday that the resurgence of cases and high inflation will not change its plan to begin asset tapering in March 2022.
“The COVID-19 resurgence in Europe may cause central banks to back off rate hike expectations, and there’s still some need for gold in this kind of environment,” said Innes.
Premier Li Keqiang explained that China should avoid campaign-like and aggressive economic measures even as the economic recovery from COVID-19 faces new downward pressures,
Notably, Policy decision from The Reserve Bank of New Zealand will be disclosed on Wednesday and Bank of Korea will release its policy on Thursday