01.12.202109:53:00UTC+00Gold Edges Higher In Cautious Trade

Gold edged higher on Wednesday despite Fed Chair Jerome Powell's hawkish comments pushing U.S. Treasury yields higher, especially at the short end of the curve.

Spot gold rose 0.7 percent to $1,786.05 per ounce, while U.S. gold futures were up 0.6 percent at $1,787.15.

The yield on two-year notes, which reflects short-term interest rate expectations, rose to as high as 0.622 percent, up from as low as 0.4410 percent on Tuesday, after Federal Reserve Chair Jerome Powell said asset purchases may need to be tapered faster to fight rising inflation.

In his testimony before the Senate Banking Committee, Powell said that the description of the term 'transitory' for inflation is no longer appropriate and signaled a discussion on faster tapering of bond purchases when the Fed meets this month.

Elsewhere, China's Vice Premier Liu He pledged enhanced support for businesses and said he's expecting a strong 2021.

Rising yields caused the dollar to steady against most peers while equity markets resumed their upward course amid bets that the latest Covid-19 variant would not derail the economic recovery.

U.S. ADP private payrolls data for November is scheduled for release at 8:15 am ET.

U.S. ISM manufacturing PMI for November and construction spending data for October are also set for release in the New York session.

Federal Reserve Chair Jerome Powell will testify on the CARES Act, along with Treasury Secretary Janet Yellen before the House Financial Services Committee in Washington DC at 10:00 am ET.