Gold prices steady as focus shifts to Powell’s speech

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A five hundred gram gold bar, left, and a a one kilogram gold bar, produced by Swiss manufacturer Argor Hebaeus SA, in Budapest, Hungary.

Akos Stiller | Bloomberg | Getty Images

Gold prices were steady on Tuesday, with cautious traders largely focusing on Federal Reserve Chair Jerome Powell’s speech for insights into the U.S. central bank’s rate-hike trajectory.

Spot gold held its ground at $1,872.79 per ounce, as of 0333 GMT. U.S. 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 U.S. 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 Fed Chair Powell’s speech later today could prompt some near-term profit-taking in gold,” said IG Market strategist Yeap Jun Rong.

“However, market is on the watch for a downside surprise in the U.S. 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 basis point or a 25 bps rate hike was a possibility in the upcoming Fed meeting, while Atlanta Fed President Raphael Bostic commented that 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.

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