Gold steady as investors await Jerome Powell’s first congressional testimony

Bengaluru — Gold prices were steady on Tuesday, as the US dollar remained largely unchanged ahead of US Federal Reserve chairman Jerome Powell’s first congressional testimony.

Spot gold was up 0.1% at $1,241.20/oz at 4.20am GMT, while US gold futures for August delivery were up 0.1% at $1,241.60/oz.

The dollar index was steady against major peers on Tuesday, as investors awaited Powell’s testimony for any clues on the pace of US interest rate rises. Powell takes his upbeat view of the US economy to Capitol Hill on Tuesday, with markets and many of his colleagues expecting two more interest rate increases in 2018 amid a continued economic expansion.

Higher US rates tend to boost the dollar, in which the metal it is priced.

Meanwhile, Asian stocks sagged on Tuesday, weighed by a sharp decline in crude oil prices. Brent crude futures shed more than 4% on Monday as the concern over supply outages eased, but prices recovered after more oil workers went on strike in Norway threatening further disruptions.

“Investor appetite for gold is not very strong at the moment. I think that it is going to be trading sideways for a long time,” said Richard Xu, a fund manager at China’s biggest gold exchange-traded fund, HuaAn Gold. “We’ve also noticed that Chinese gold ETF [exchange-traded fund] liquidity has dropped a lot these days so that means people do not see any major breakthrough in either direction,” Xu said.

Demand for gold in top consumer China has been weak as a trade war with US had weakened the local currency and affected investor sentiment, with prospects of a pickup further dented after data showed slowing growth in the economy.

Escalating and sustained trade conflicts following US tariff actions threaten to derail economic recovery and depress medium-term growth prospects, the International Monetary Fund (IMF) warned on Monday.

“If China is slowing down, there will be consequences to global commodity consumption and that’s going to drag gold down as well,” Xu said.

Spot gold was expected to break a support at $1,237/oz and fall to the next support at $1,226, Reuters technicals analyst Wang Tao said.

Holdings in SPDR Gold Trust, the world’s largest gold-backed ETF, fell 0.15% to 794.01 tonnes on Monday.

Silver was up about 0.2% at $15.76/oz.

Platinum climbed 0.6% at $826.75/oz while palladium rose 0.6% to $922.72.

Reuters