Dow Stocks JPMorgan, Goldman Rise As Fed Signals More Hawkishness

"Although the Fed has three rate hikes in the dot plots this year, the market is now pricing just two, so any hawkish hints could drive Treasury yields and the Dollar higher", says Perry.

Yellen said she did not want to weigh in on specific tax and spending proposals, but she urged policymakers to consider the importance of making U.S. businesses more efficient, which economists believe is essential to raising living standards over the long term. Gold is highly-sensitive to climbing U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.

Based on the Fed's economic projections for this year, it could raise interest rates three times in 25 basis-point steps. The funds rate is now targeted in the 0.5 percent to 0.75 percent range.

Yellen said growth is "moderate" as the job market improves and inflation gradually move up the Fed's 2 percent target.

Janet Yellen told the Senate Banking Committeet it would be "unwise" to wait much longer before raising rates further, as the economy "continues to show signs of strengthening".

While Yellen said she would not "comment in detail on immigration policy" she did lay out what the impact of restraining immigration would be on the economy.

"Consumer spending has continued to rise at a healthy pace, supported by steady income gains, increases in the value of households' financial assets and homes, favorable levels of consumer sentiment, and low interest rates", she said.

And she dodged answering questions about some of his possible policies and their impact, noting it was "too early to know" about the timing, size and composition of any Trump fiscal stimulus.

President Donald Trump says he will spend more on infrastructure, cut taxes, slash regulation, and make major changes in trade policies. Two vacancies exist and Yellen's own term as chairwoman ends in February 2018.

At Tuesday's hearing, Senate Banking Committee members focused early on the Fed's role as regulator and the Trump administration's nascent efforts to scale back the Dodd-Frank rules that were enacted after the financial crisis.

McHenry, who is vice chairman of the House Financial Services Committee, said in a January 31 letter to Yellen that it was "unacceptable" that the Fed was conducting global talks after Trump took office but before he had a chance to put his own people in place.

The prospect of USA economic stimulus has helped support stocks since the US presidential election on November 8.

  • Zachary Reyes