Gold dips as investors cash in ahead of Fed address

Bengaluru — Gold prices fell on Thursday, following a sharp rise in the previous session, as investors squared positions ahead of a much-awaited speech from US Federal Reserve chair Jerome Powell.

Spot gold was down 0.6% to $1,941.43/oz by 3.15am GMT, after rising 1.3% on Wednesday on expectations of more stimulus measures. US gold futures eased 0.2% to $1,949.50.

“After rising $26/oz overnight, short-term profit taking has seen gold edge lower in Asian trading,” said Jeffrey Halley, a senior market analyst at Oanda.

“Gold should find willing buyers on dips to $1,935/oz. Overall, we expect gold to trade in a choppy $1,935-$1,970 range ahead of the Powell speech.”

Powell is set to address the Fed’s annual central bankers’ conference at 1.10pm GMT, with investors looking for any hints of the bank’s strategy on inflation and monetary policy.

The Fed has slashed interest rates to near zero and rolled out unprecedented stimulus measures to revive the coronavirus-hit economy, helping gold climb 28% so far in 2020 as it is viewed as a hedge against inflation and currency debasement.

Gold bulls have been waiting for some new catalysts to drive prices higher, though long-term prospects are intact with real rates low and suppressed, analysts at Phillip Futures said in a note.

“The Europeans have given gold prices a boost by launching new stimulus measures. All eyes of gold bulls are on the Fed, hungry for more stimulus,” the brokerage said.

Offering some respite to gold, the dollar index fell 0.2% to a near one-week low. A weaker dollar makes gold less expensive for holders of other currencies.

Also, risk sentiment was somewhat hit by fears of fresh tensions between the US and China as Washington blacklisted 24 Chinese companies and Beijing reportedly test-fired missiles into the South China Sea.

Elsewhere, silver dropped 1.9% to $27.01/oz and palladium fell 0.8% to $2,180.42, while platinum edged 0.1% higher to $929.29.

Reuters