By Bharat Gautam
(Reuters) – Gold steadied near a one-week low on Wednesday after Federal Reserve Chair Jerome Powell signalled further interest rate hikes, as traders positioned for the second day of his testimony and more economic cues.
Spot gold was flat at $1,813.78 per ounce by 9:15 a.m. ET (1415 GMT), after hitting its lowest since Feb. 28 at $1,809.27. U.S. gold futures were down 0.1% to $1,817.80.
“There are still several more event-driven risks the gold market needs to absorb – Powell today, jobs data on Friday, CPI on Tuesday,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago, adding prices had near-term support around $1,800.
The Fed will likely need to raise rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation, Powell said on the first day of his semi-annual two-day testimony before Congress.
U.S. private payrolls increased more than expected in February.
Following the Fed chief’s remarks on Tuesday, gold fell nearly 2%.
Powell reverting to a higher-for-longer stance took the wind out of gold as the markets now expect higher rates, StoneX analyst Rhona O’Connell said.
Gold’s appeal tends to dim when rate hike expectations rise because higher rates increase the opportunity cost of holding non-yielding bullion.
Traders now mostly expect a 50 basis-point hike at the Fed’s March 21-22 policy meeting.
The dollar scaled multi-month highs, making gold less attractive to overseas buyers. [USD/]
In February, global gold ETFs (exchange traded funds)suffered more losses led by European funds while North American funds saw small outflows for the first time in two months, the World Gold Council said. [GOL/ETF]
Silver gained 0.1% to $20.07 per ounce, platinum firmed 0.3% to $939.13, and palladium rose 1.3% to $1,404.65.
(Reporting by Bharat Govind Gautam, Ashitha Shivaprasad and Kavya Guduru in Bengaluru;Editing by Elaine Hardcastle)
