Gold prices are continuing higher after the April FOMC rate decision helped bolster the yellow metal’s appeal. XAU/USD has been on the rise since, nearly touching the 1790 handle, and extending the monthly gain to near 5% with only a couple of days left until May starts. The move appears to be driven by the underlying notion that no lasting inflation is expected in the economy in the short term.

Moreover, the Fed dispelled suggestions that scaling back bond purchases will occur anytime soon. Fed Chair Powell laid out the central bank’s shortfall thus far in reaching its dual mandate targets set for inflation and employment. Core PCE (the Fed’s preferred inflation figure), according to the Bureau of Economic Analysis (BEA), stood at 1.6% on a 12-month basis in February, up from 1.4% in January.

Treasury yields scaled back as investors shifted into government bonds, particularly toward the short-end of the curve with the dovish Fed comments fueling the move. The 5-year Treasury yield pulled back after three consecutive daily gains, extending the monthly loss to near 10%. Elsewhere, the benchmark 10-year yield fell over half a percent.

Many investors and analysts fear that a premature balance sheet taper may cause yields to rise too far and too fast against a recovering, yet fragile economy. Those fears are compounded by the likely heavy supply increase of government bonds that will be needed to fund infrastructure spending and other initiatives from the Biden administration. While it is unclear exactly how much of the new spending will be funded, it is near certain that the US Treasury will have to increase its issuance of bonds.