Gold prices dip as dollar remains strong on Powell's comments

Gold prices dip as dollar remains strong on Powell's comments

New York Federal Reserve President William Dudley also added to the evidence that the USA central bank under new chief Jerome Powell would seek to tighten monetary policy with four interest rates rises this year, more than previously expected.

Fed chief Powell will deliver the second leg of his semi-annual testimony on Thursday, an opportunity to clarify comments made on Tuesday that rekindled speculation over USA monetary tightening this year happening faster than expected. Analysts are watching to see if Powell adjusts his tone today.

The Dow Jones industrial average dropped 420.22 points, or 1.7 percent, to 24,608.98, and the Nasdaq composite fell 92.45, or 1.3 percent, to 7,180.56.

The core index, which Fed officials see as a better indicator of underlying price pressures because it excludes often-volatile costs for food and fuel, was up 0.3 percent in January - the most in a year - and 1.5 percent from January 2017, the same annual gain as the previous three months. Shares of the company, which sells dental and animal health products, dropped $7.49, or 23.7 percent, to $24.09.

The CBOE Volatility index .vix , the measure of short-term stock market volatility on Wall Street, was last at 20.72 - its highest in a week.

Investors have begun to worry that the Fed might accelerate the pace of its credit tightening if inflation, which has been dormant for years, starts to show signs of accelerating.

Powell, who took office on February 5, was tapped last November as the new Fed leader after President Donald Trump made a decision to against offering Yellen a second term.

Making his first public comments as leader of the nation's central bank, Powell depicted an economy that was gaining strength and stressed that he meant to follow the approach to interest rates set by his predecessor, Janet Yellen.

Bond prices rose as demand jumped for safer investments, which pushed yields lower. The euro fell to $1.2170 from $1.2203, and the British pound slipped to $1.3743 from $1.3771.

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What else could help drive markets?

Initial U.S. jobless claims ( fell by 10,000 to 210,000 in the seven days ended February 24, the lowest level in almost 50 years. The yearly increase in the PCE was flat at 1.7% for the third month in a row, below the Fed's 2% target. That data is due at 8:30 a.m. ET. Eastern, with economists expecting a reading of 59.0% for ISM's index.

In addition, reports covering USA auto sales for February are scheduled to roll in throughout the day.

Oil fell more than 1 percent, hitting two-week lows on pressure from a strong dollar and worries that surging USA crude output might thwart efforts by the Organization of the Petroleum Exporting Countries to drain global supply.

Which stocks look like key movers?

Toronto-Dominion Bank also rallied after reporting quarterly earnings that beat market expectations.

In contrast, soft inflation data in the euro zone on Wednesday dented expectations that the European Central Bank (ECB) will dial back its stimulus this year, driving the euro to a six-month trough against the yen in Asian trading on Thursday.

The dollar index is still down 1.5 percent this year, dogged by suspicions that the Trump administration prefers a weaker dollar to mend its bulging trade deficit.

What are other assets doing?