Gold prices climbed close to their highest levels reached in the previous session following dovish remarks from U.S. Federal Reserve Chair Jerome Powell. The yellow metal was further supported by a decline in the U.S. dollar in benchmark 10-year U.S. Treasury yields. The weaker dollar made the bullion less expensive for investors using rival currencies, while the lower bond yields reduced the opportunity cost of holding non-yielding assets like gold.

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Spot gold is currently trading at $1,804.97 per ounce as of 0801 GMT.

In his testimony before the Senate Banking Committee, Powell defended loose monetary policy against claims that it could raise inflation rate and financial risks in what appears to be an emerging economic boom. He said interest rates would remain low and monetary policy would remain accommodative because the economic recovery from the pandemic is far from complete. The Feds will also continue its $120 billion in monthly bond purchases.

The U.S. 10-year government benchmark bond yield fell after Powell’s statements. It is because loose monetary policy raises inflation, and gold is an inflation hedge. The Fed’s decision to stop the sale of Treasury bills also put short-dated bond yields at risk of turning negative.

Stephen Innes, the chief global market strategist at Axi, commented that Powell’s dovish statement was credible enough to give gold more breathing room. He predicted that bond yields would continue to influence the movement of gold prices in the near term.

Michael Langford of AirGuide interpreted Powell’s remarks to indicate that the stimulus trade will remain for at least the first half of the year. He also suggested that the dollar depreciation and the inflation rate will be the key drivers for the bullion.

Meanwhile, executives from Pfizer Inc., Moderna Inc., and Johnson & Johnson assured Congress that they would be able to supply enough doses to vaccinate 130 million Americans by the end of March. Pfizer expects to deliver more than 13 million doses per week by mid-March. Moderna said it would be able to supply almost 50 million doses per month. And Johnson & Johnson’s Janssen Pharmaceuticals unit said they could ship nearly 20 million doses upon authorization of its COVID-19 vaccine.

The U.S. could also get additional doses from AstraZeneca Plc and from Novavax Inc., which are still running clinical trials. If authorized, AstraZeneca said they could supply enough vaccines to inoculate 215 million people by the end of April, while Novavax could ship 110 million doses by the third quarter of the year.

In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, fell by 0.4% yesterday to 1,110.44 tons, from 1,115.4 tons on Monday.