Gold fell on Tuesday following the confirmation Chairman Powell would remain at the Federal Reserve for another term.
The yellow metal declined as traders positioned for a more hawkish scenario on rates than the possible alternatives of Jay Powell.
Fed Governor Lael Brainard was in contention for the post and would have be viewed as the more dovish option.
Jay Powell has been supportive of taking action to help fight soaring inflation and markets reacted by selling gold and equities.
Traders priced futures markets for a 0.25% hike in the Fed June meeting next year. Gold sank back towards the $1,800 level.
However, some gold analysts see the dip as an opportunity to pick the metal up as Powell still has a dovish stance on policy, preferring to be patient and digest further data points.
#Gold is selling off on the renomination of #Powell as traders think the devil you know is better than the one you don't. But not replacing Powell with an even bigger dove doesn't make him a hawk. With #Brainard as vice-chair, #Fed policy will be more dovish than ever. Buy gold!— Peter Schiff (@PeterSchiff) November 22, 2021
Others pointed to the removal of uncertainty as reason for risk on moves in markets.
“Looking ahead, the decision to re-appoint Jerome Powell also removes uncertainty with his current term ending in February 2022. If there had been delays, this may have caused significant market anxiety but with Powell back in the driving seat, we expect to see minimal market impact,” said Olivier Konzeoue, FX Sales Trader at Saxo Markets.