A heavyweight hearing is coming! Yellen's speech is expected to release important information that the dollar and gold will welcome the big market.

In Asian trading on Tuesday, the dollar index fell slightly to around 90.70, while spot gold rose modestly, trading around $1840 an ounce. On Tuesday, local time, the US Senate will hold a hearing on Ms Yellen's nomination for Treasury Secretary, and investors are waiting for Ms Yellen to comment on stimulus policies. Ms Yellen's speech is also likely to touch on exchange rate policy. Analysts pointed out that Yellen's latest speech is likely to have a significant impact on the direction of the dollar, which in turn will provide guidance to gold prices in the short term, and investors need to be vigilant against the sharp fluctuations in the market during the Yellen hearing.

At 23: 00 Hong Kong time on Tuesday, the US Senate Finance Committee held a hearing on the nomination of Yellen (Janet Yellen) as US Treasury Secretary. If approved by the Senate, Yellen will replace the current Treasury Secretary Nuchin as the first female Treasury Secretary in the history of the United States.

It is reported that US Treasury Secretary Yellen, nominated by US President-elect Joe Biden, will attend a meeting of the Senate Finance Committee on Tuesday, which will confirm her nomination. It is reported that Yellen will tell the Senate Finance Committee that the government must take "significant action" on its next novel coronavirus rescue plan.

"neither the president-elect nor I will ignore the debt burden of the United States when proposing this relief package," Yellen said in a prepared opening statement at the committee hearing. But now, with interest rates at historic lows, the wisest thing we can do is to take big action. I believe the benefits will far outweigh the costs, especially if we care about helping those who have been struggling for a long time. "

The proposed assistance programme includes $415 billion to support the United States response to the virus and the promotion of the novel coronavirus vaccine, providing about $1 trillion in direct assistance to families and about $440 billion in assistance to small businesses and communities particularly affected by the epidemic.

Many Americans will also receive $1400 in stimulus money, in addition to the $1400 check approved in a bailout bill passed by Congress last month. Supplementary unemployment insurance will also be increased from the current $300 a week to $400 a week and will be extended until September.

In her prepared testimony, Yellen also said the U.S. economy must be rebuilt "to create more prosperity for more people and to ensure that American workers can compete in an increasingly competitive global economy."

Biden, who will be sworn in on Wednesday, outlined a $1.9 trillion economic stimulus package last week, saying bold investment was needed to stimulate the economy and speed up the distribution of vaccines to contain the novel coronavirus epidemic.

The proposal, known as the American Rescue Plan (American Rescue Plan), includes several familiar stimulus measures, hoping that additional financial support will support American households and businesses until the novel coronavirus vaccine is widely used.

Since gold is often seen as a hedge against inflation and currency depreciation, the launch of a massive stimulus package will boost demand for gold.

"Gold is seen as a hedge against inflation and is likely to be driven by fiscal stimulus," said Lukman Otunuga, a senior research analyst at FXTM.

Yellen's speech is expected to have an impact on the trend of US dollar and gold.

In addition to the stimulus, Ms Yellen is expected to cover exchange rate policy at the hearing. U. S. media reported on January 17 to the Biden transition team as the source, Yellen will make it clear that the United States will not seek a weak dollar for competitive advantage.

Ms. Yellen is expected to reaffirm her commitment to market-determined exchange rates at Tuesday's hearing, according to officials familiar with the Biden transitional government.

If asked about the new administration's dollar policy at Tuesday's hearing, Ms Yellen will respond: "the value of the dollar and other currencies should be determined by the market," according to the report. Market regulation reflects changes in economic performance and can widely promote global economic adjustment. "

The position means that the new US administration will abandon the weak dollar policy called for by incumbent President Donald Trump. Trump has repeatedly expressed the view that "the dollar is too strong" during his term of office, arguing that a strong dollar harms US competitiveness, while a weak dollar helps US exports.

Yellen has been one of the dove representatives during her tenure as chairman of the Federal Reserve. Ms Yellen has previously mentioned the benefits of a weaker dollar for exports and improving the current account deficit.

In 1995, the United States adopted a policy of supporting a strong dollar. Since then until the Trump administration, no administration has said bluntly that the dollar has "become too strong".

Analysts pointed out that Yellen's comments could have an important impact on the direction of the dollar, thus providing guidance on the direction of gold prices. The recent trend of gold prices is largely influenced by the trend of the dollar.

"this is different from the strong dollar policy in the past," Khoon Goh, head of Asian research at ANZ in Singapore, said of Ms Yellen's upcoming speech. The commitment to let the market set the exchange rate means that the new US administration will be happy to see the dollar weaken further. "

Rodrigo Catril, foreign exchange strategist at National Bank of Australia in Sydney, said: "We interpret Yellen's view as that the US government is unlikely to stop the market-driven continued depreciation of the dollar. The current downward trend of the dollar has not been challenged. "

Rhona O'Connell, head of market analysis at StoneX, said: "Yellen, who is scheduled to testify in Congress on Tuesday, is expected to say that she does not approve of a deliberate depreciation of the dollar, but would prefer to see the dollar fluctuate according to the free market. This is good for the dollar in principle because it is a change of policy. "

Moh Siong Sim, an analyst at Bank of Singapore, said: "Yellen seems to be hinting at a non-interventionist approach, that is, a return to the traditional practices before Trump took office." I think for the finance minister, his remarks will be less focused on the dollar and financial markets, and the main focus will be on the implementation of fiscal rescue policies. " He expects the dollar to continue to slide.

Carsten Fritsch, an analyst at Commerzbank, said the impact on gold prices would depend on the extent and direction of the dollar's reaction to Ms Yellen's remarks.

Commerzbank believes that Yellen does not want the dollar to strengthen, and the euro / dollar is unlikely to fall below the 1.20 mark.

Nicholas Frappell, global general manager of ABC Bullion, said gold was still vulnerable to dollar sentiment and yields in the short term.

Phillip Streible, chief market strategist at Blue Line Futures, said gold could fall below $1800 an ounce and hit $1795 an ounce if the dollar index rises.