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Gold sensitive to Powell's comments, but still has a shot above $2,000 Credit Suisse

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(Kitco News) - With bond yields trading near a one-year high, Market attention is laser-focused on Federal Reserve Chair Jerome Powell’s semi-annual monetary policy update before Congress, according to some analysts.

Fahad Tariq, precious metals analyst at Credit Suisse, said that gold will be susceptible to Powell’s outlook on the economy and interest rates. He added that the rise in bond yields indicates that the market could be pricing in a rate hike as early as mid-2023.

However, he added that gold could get a boost if Powell talks about the potential to implement a yield curve control program to cap rising bond yields.

“Overall, the real rate environment and Fed stance remain supportive of gold prices, but key to watch will be if yields continue to rise and of course, if the U.S. Fed does, in fact, change its dovish stance – we think this is unlikely based on recent commentary highlighting higher employment as the priority vs. preventing inflation,” Tariq said.

Tariq added that he expects the gold market to continue its upward trend through 2021 and for prices to push to a high of $2,200 an ounce.

The comments come as gold prices continue to hold above $1,800 an ounce after bouncing off last week’s seven-month low. April gold futures last traded at $1,806.70 an ounce, relatively unchanged on the day.

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