Fed’s stance keeps gold steady

Gold held steady on Wednesday as the dollar traded near three-week lows, after US Federal Reserve chair Jerome Powell reiterated that the central bank will be patient in increasing interest rates, while palladium hovered near the psychological level of $1,550.

Spot gold inched down 0.1% to $1,327.51/oz as of 4.34am GMT, while US gold futures were up 0.1% at $1,329.8.

The dollar index against major currencies was at 96.131, after shedding 0.4% overnight to 95.948, its lowest since February 5.

“Gold has found very good support at $1,300, especially after the Fed’s stance,” said Mark To, head of research at Wing Fung Precious Metals in Hong Kong.

“At this moment, people have very diverse views on the course of Fed. But it is patient and more data dependent, which is going to be good for gold. $1,300- $1,400 should be very reasonable price range for this year.”

During his testimony before the US Senate banking committee on Tuesday, Powell reiterated that the Fed will remain “patient” in deciding on further interest rate increase.

Meanwhile, spot palladium slipped 0.8% to $1,548/oz, after scaling a record peak of $1,565.09 in the previous session.

The autocatalyst metal has climbed about 23% so far in 2019 on widening supply tightness in the market, while threats of strikes by mineworkers in SA added support to the metal.

Analysts say that although the fundamental reasons are still intact, the strong rally in prices has increased risk of profit-taking or correction.

Norilsk Nickel, the world’s largest palladium producer, said tighter emissions regulations in all major markets and flattish primary supply would widen a palladium deficit in 2019.

Investors will be keeping an eye on the US-North Korean summit, scheduled to kick off in Hanoi later on Wednesday.

US President Donald Trump and North Korean leader Kim Jong-un were due to meet for their second summit, betting that their personal relationship can break a stalemate over the North’s nuclear weapons and end more than 70 years of hostility.

Elsewhere, silver fell 0.4% to $15.87/oz.

Platinum was flat at $856, after scaling its highest since early November at $861 earlier in the session.

“Although platinum has bounced back to three-month highs on mine strike fears, such a boost is likely to be limited,” Metals Focus said in its weekly note.

“Widening structural surplus in the platinum market since 2016, is expected to persist for the foreseeable future.” 

Reuters