Gold rises as investors await news of Fed monetary policy direction

Bengaluru — Gold prices edged up on Wednesday, aided by a dip in the US dollar, with investors largely focusing on Federal Reserve chair Jerome Powell’s speech for insights into the US central bank’s monetary policy path.

Spot gold was up 0.1% at $1,751.89 per ounce at 2.45am GMT. US gold futures rose 0.1% to $1,765.40.

The dollar index was down 0.1%, making bullion less expensive for other currency holders.

Powell’s speech at a Brookings Institution event, scheduled for 6.30pm GMT, will be evaluated for any new clues on the US central bank’s plans for rate hikes in 2023. The ADP National Employment report due at 1.15pm GMT is also on investors’ radar.

Powell’s speech is the main focus for the market, said Edward Meir, an analyst with ED&F Man Capital Markets.

“If Powell takes a hawkish stance, the dollar will strengthen and gold will move lower, probably back to the $1,745 level. But if he sounds more conciliatory, then gold could maybe move up to the $1,780 level.”

High interest rates have kept a leash on gold’s traditional status as a hedge against surging inflation and other uncertainties this year, as they translate into higher opportunity costs to hold the non-yielding asset.

Meanwhile, top gold consumer China reported a slight drop in new Covid-19 cases for November 29, the National Health Commission (NHC) said.

Gold needs a strong China as it drives risk appetite and could bolster jewellery demand, and bullion could gain if China’s health authorities provide some clear signals that they are close to tweaking their zero-Covid policy, Edward Moya, senior analyst with Oanda, said in a note.

Spot silver slipped 0.1% to $21.25, platinum was up 0.3% to $1,004.75 and palladium rose 1.2% to $1,856.17.

China’s factory activity contracted at a faster pace in November, an official survey showed, weighed down by softening global demand and Covid-19 restrictions.

Reuters