Gold prices steady as investor focus turns to Powell speech

Bengaluru — Gold prices were steady on Tuesday with cautious traders largely focusing on Federal Reserve chair Jerome Powell’s speech for insights into the US central bank’s rate-hike trajectory.

Spot gold held its ground at $1,872.79 an ounce at 3.33am GMT. US gold futures were flat at $1,877.70.

Investors’ focus is on Powell’s speech at a central bank conference later in the day. Market participants will also scan the US consumer price index (CPI) data due on Thursday for further clues on Fed’s policy stance.

“Gold prices are hitting a key resistance at the $1,875 level. A hawkish tone in Powell’s speech could prompt some near-term profit-taking in gold,” IG Market strategist Yeap Jun Rong said. “However, market is on the watch for a downside surprise in the US. CPI to support the less-hawkish rate-hike expectations, which could translate to upside for gold prices.”

Elevated interest rates dull gold’s appeal as an inflation hedge and raise the opportunity cost of holding the non-yielding asset.

San Francisco Federal Reserve president Mary Daly on Monday said that either a 50 or a 25 basis point rate hike was a possibility in the upcoming Fed meeting, while Atlanta Fed president Raphael Bostic said it was appropriate to be ‘more cautious’ in calibrating rates, with rates possibly staying higher into 2024.

The market consensus of a mild recession appears to be playing out, but with a nod to a more severe downturn could continue to be gold positive, the World Gold Council said.

Spot silver lost 0.2% to $23.59, while platinum rose 0.2% to $1,080.91 and palladium gained 0.3% at $1,781.14. 

Reuters