Oil prices hold gains on upbeat China trade data

SINGAPORE, March 7 – Oil prices held steady on Thursday, holding onto overnight gains after upbeat Chinese trade data and after US data showed a smaller-than-expected rise in crude inventories and large draws in fuel stocks.

However, expectations that US interest rate cuts could be delayed capped gains.

Brent crude futures slipped 8 cents to USD 82.88 a barrel by 0736 GMT, while US West Texas Intermediate crude futures CLc1 inched down 7 cents to USD 79.06 a barrel despite China’s import and export growth beating estimates.

“China’s trade balance data is a positive sign for the oil market’s demand outlook,” Auckland-based independent analyst Tina Teng said.

However, she added that risk-off sentiment dominated financial markets as stocks are retreating on Wall Street.

The world’s top crude importer posted a 5.1% rise in imports in the first two months of 2024 from a year earlier to about 10.74 million barrels per day (bpd), customs data showed on Thursday, as refiners ramped up crude purchases to meet fuel sales during the Lunar New Year holiday.

China’s January-February refined products exports dropped 30.6% on year to 8.82 million tons, reducing supplies for global markets.

Upbeat trade data from China, the world’s second-biggest economy, suggests global trade is turning a corner in an encouraging signal for policymakers as they try to shore up a stuttering economic recovery.

Brent and WTI edged up about 1% on Wednesday after crude inventories rose for a sixth week in a row, building by 1.4 million barrels, about two-thirds of the 2.1 million-barrel rise analysts had forecast in a Reuters poll.

Gasoline and distillate stocks fell more than expected, the EIA data also showed.

A strong US dollar will maintain the status quo in the near term, as markets brace for a risk the US Federal Reserve’s first interest rate cut gets delayed to the second half of this year, according to a Reuters poll of foreign exchange strategists.

Fed Chair Jerome Powell said continued progress on inflation “is not assured”, though the U.S. central bank still expects to reduce its benchmark interest rate this year.

(Reporting by Florence Tan in Singapore and Arathy Somasekhar in Houston; Editing by Tom Hogue and Raju Gopalakrishnan)

Selloff, what selloff? Markets back in their groove

March 7 – As you were.

Asian markets are set for a positive open on Thursday following a widespread ‘risk on’ move on Wednesday, while investors in the region await trade figures from China and Australia, and an interest rate decision from Malaysia.

Global stocks and risk assets on Wednesday shrugged off the previous day’s jitters and resumed their climb higher while US bond yields drifted lower, after Federal Reserve Chair Jerome Powell kept the door open to interest rate cuts later this year.

If Powell’s goal was to play a straight bat in his three hours of questioning from US House of Representative lawmakers on Wednesday and avoid any market ructions, he more than met it.

The MSCI Asia ex-Japan index had already risen 0.77% on Wednesday before Powell spoke, its biggest rise in two weeks. The dollar slide, lower bond yields and rise on Wall Street after his testimony should give regional sentiment a further boost on Thursday.

The main economic indicator in Asia on Thursday is Chinese trade. Beijing this week said it is aiming for GDP growth this year of around 5% again, but many analysts are skeptical – the performance of imports and exports in recent months suggests trade will not be a major driver.

Export growth likely slowed in the January-February period, suggesting manufacturers are still struggling for overseas buyers and in need of further policy support at home.

Data for the January-February period is expected to show exports grew 1.9% year-on-year in US dollar terms compared with 2.3% growth in December, according to a Reuters poll, while import growth accelerated to 1.5% from 0.2%.

Several Asian countries publish their latest foreign exchange reserves holdings on Thursday. At the last count, the six jurisdictions – China, Japan, Hong Kong, Malaysia, Indonesia and Singapore – held a combined USD 5.55 trillion, nearly half of the global total.

China and Japan are the world’s largest holders with USD 3.22 trillion and USD 1.29 trillion, respectively. Changes in FX reserve holdings are very small, but China’s numbers in particular are always closely watched.

Malaysia’s central bank, meanwhile, announces its latest interest rate decision. Bank Negara Malaysia (BNM) is expected to leave its overnight policy rate (OPR) unchanged at 3.00% and hold it there until at least 2026 as inflation was expected to pick up, a Reuters poll found.

Although inflation eased to 1.5% in January, having peaked at 4.7% in August 2022, economists expect price pressures to rise in the second half of this year, suggesting a rate cut from the central bank was unlikely anytime soon.

Here are key developments that could provide more direction to markets on Thursday:

– China trade (February)

– China, Japan FX reserves (February)

– Malaysia interest rate decision

(By Jamie McGeever)

Dollar falls as Powell says Fed is on track to cut rates this year

NEW YORK, March 6 – The dollar slipped across the board on Wednesday after Federal Reserve Chair Jerome Powell said continued progress on inflation “is not assured,” though the US central bank still expects to reduce its benchmark interest rate later this year.

“If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in remarks prepared for delivery to the House Financial Services Committee.

The euro was 0.37% higher against the dollar at USD 1.0897, after strengthening to USD 1.09155, its highest since Feb. 2.

“Fed Chairman Powell’s opening statement to Congress essentially repeated the same main points that he and his colleagues have been hitting for months,” Matt Weller, head of market research at StoneX, said.

But Powell’s words disappointed traders, who in recent weeks had begun to speculate that the Fed would back away from any potential rate cuts in the first half of the year, Weller said.

“With Fed Chairman Powell refusing to endorse that possibility, some forward-thinking traders have reversed bullish bets on the greenback from the past couple weeks,” he said.

Powell will appear before the Senate Banking Committee on Thursday.

The dollar index, which measures the currency’s strength against a basket of six currencies, was down 0.41% at 103.36. The index had climbed as high as 104.97, up about 3.6% for the year, in mid-February, helped by robust US economic data, but has retreated as recent reports showed some softness.

Data on Wednesday showed US private payrolls rose slightly less than expected in February, while wages for workers remaining in their jobs increased at the slowest pace in 2-1/2 years, consistent with a cooling labor market. The Labor Department’s more comprehensive and closely watched February employment report is due on Friday.

“Job openings and ADP private payroll data keep the path open for Fed rate cuts later this year,” Bill Adams, chief economist for Comerica Bank, said in a note, citing the report by Automatic Data Processing.

The dollar slipped on Tuesday after data showed US services industry growth slowed last month.

Traders also braced for the ECB’s rate decision on Thursday with the central bank expected to leave its benchmark interest rate at a record 4%, putting the focus on clues about when cuts may begin.

“We think they are going to echo their message again and tomorrow is not going to change the outlook,” Danske Bank’s Mellin said.

Elsewhere, sterling edged up 0.25% to USD 1.2738 as traders digested Britain’s latest fiscal plans, possibly the last budget before an election expected later in the year.

British finance Minister Jeremy Hunt offered no surprises in his latest statement, announcing a two percentage point cut to National Insurance Contributions (NICs), while freezing fuel and alcohol duty.

Bitcoin was up 5.76% at USD 66,963, rebounding from Tuesday’s sharp swoon after it hit a new high. The cryptocurrency’s recent price rise has been fueled by investors pouring money into US spot exchange-traded crypto products and the prospect that global interest rates may fall.

Against the yen, the dollar was 0.45% lower at 149.38 yen on reports that some Bank of Japan board members think it would be appropriate to lift rates from below zero at the March meeting.

Analysts are mostly expecting the BoJ to exit negative rates at the April meeting if Japan’s spring wage negotiations result in solid pay hikes.

The US dollar weakened 0.57% against its Canadian counterpart after the Bank of Canada kept its key overnight rate steady at 5% on Wednesday as expected and said it was still too early to consider a cut, given persistent underlying inflation.

The Australian dollar brushed off gross domestic product growth of a mere 0.2% in the fourth quarter, reinforcing the case for rate cuts. The currency was last up 0.94% at USD 0.6565.

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Samuel Indyk and Brigid Riley; Editing by Shri Navaratnam, Lincoln Feast, Sharon Singleton, Emelia Sithole-Matarise, Deepa Babington, and Richard Chang)

Yields fall to one-month lows after Powell comments

March 6 (Reuters) – Longer-dated US Treasury yields fell to one-month lows on Wednesday after Federal Reserve Chair Jerome Powell said that continued progress on inflation “is not assured,” though the central bank still expects to reduce its benchmark interest rate later this year.

“If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in testimony to the House Financial Services Committee.

“Powell pretty much straight out said that they’re done with rate hikes. That’s a big risk the market was concerned with,” said Marvin Loh, senior global macro strategist at State Street in Boston.

“Certainly, they feel that policy is restricted enough that it’s going to do its job. It’s just a matter of how long it’s going to take,” Loh added.

Investors are evaluating when the US central bank is likely to begin cutting rates.

Fed funds futures traders see a 70% probability the first cut will come by June, according to the CME Group’s FedWatch Tool.

Friday’s jobs report for February may provide the next clues. It is expected to show that employers added 200,000 jobs during the month, according to economists’ polled by Reuters.

Private payrolls increased by 140,000 jobs last month after rising by an upwardly revised 111,000 in January, the ADP Employment report showed on Wednesday.

Other data on Wednesday showed that US job openings fell marginally in January, while hiring declined as labor market conditions continue to gradually ease.

A Fed survey also found that US economic activity increased slightly from early January through late February.

Will Compernolle, a macro strategist at FHN Financial in New York, said that markets are concerned that growth may “overheat,” but adds that this would only be problematic if inflation is also high.

Thus, next week’s Consumer Price Index (CPI) for February is key for future Fed moves and market sentiment.

“If the employment report comes in mostly as expected it all hinges on Tuesday’s CPI, because that shows whether this strong growth is something to be worried about or whether it is something to celebrate,” Compernolle said.

The CPI is expected to show that headline prices rose 0.4% last month, while core prices gained 0.3%.

Benchmark 10-year yields were last down 3 basis points on the day at 4.108%, and got as low as 4.079%, the lowest since Feb. 7.

Two-year yields gained 1 basis point to 4.552% after earlier dropping to 4.510%, the lowest since Feb. 15. The inversion in the yield curve between two-year and 10-year notes deepened by five basis points to minus 45 basis points.

The amount banks and fund managers lent to the Fed in its reverse repurchase agreement facility ticked up on Wednesday to USD 456.85 billion.

(Reporting By Karen Brettell; Additional reporting by Herbert Lash in New York; Editing by Sharon Singleton and Diane Craft)

‘Worst case’ inflation fears threaten bond market calm as Powell addresses lawmakers

NEW YORK, March 6 – An uneasy calm that has pervaded the US bond market could break in coming days, as looming data on employment and consumer prices shed more light on how long the Federal Reserve might need to keep rates elevated in its battle to decisively defeat inflation.

While investors still expect rate cuts this year, unexpected economic strength has forced many to recalibrate how deeply the Fed will be able to lower borrowing costs without reigniting inflation, aligning the market’s views on easing more closely with those of the central bank. Yields on the benchmark US 10-year Treasury, which move inversely to bond prices, have traded in a narrower range over the last few weeks.

Fed Chairman Jerome Powell echoed that sentiment on Wednesday, when he told lawmakers that continued progress on lowering inflation “is not assured” though the central bank still expects to cut rates in 2024.

Things could grow more precarious for bond investors if Friday’s employment data and next week’s consumer prices report show continued strength in the economy and more stickiness in inflation, further pushing back expectations for Fed cuts. That, in theory, could drive yields higher, further hurting investors who had jumped into Treasuries over the last few months betting on imminent easing.

“The worst case scenario for the fixed income market is if we get a ‘no-landing’ scenario, where the economic picture is still solid and inflation picks up,” said Lawrence Gillum, chief fixed income strategist for LPL Financial. “If we get that reacceleration in inflation or the economy, the 10-year could retest 5%”, he said.

In his remarks, Powell noted that inflation had “eased substantially” since hitting 40-year highs in 2022. He said there were risks of both cutting rates too soon and allowing inflation to reaccelerate, and of keeping monetary policy too tight for too long and damaging an ongoing economic expansion.

The 10-year yield was recently at 4.11%, little changed after Powell’s comments. Yields have bounced between about 4.05% and 4.35% since early February, following a swift decline from a 16-year high of just above 5% hit in October 2023.

That range of just over 30 basis points compares to a 38 basis point range from the start of the year through the first two trading days of February, and an almost 57-point swing in December.

Futures tied to the fed funds rate on Wednesday showed traders pricing in about 90 basis points in rate cuts this year, much less than the 150 basis points they had priced in early January. The Fed penciled in 75 basis points of cuts in its projections late last year.

“If we get additional prints above 2% that will force the market to rethink the rate picture for the balance of the year,” causing more short-term volatility and a steepening of the yield curve, said Charlie Ripley, senior investment strategist at Allianz Investment Management.

Like many investors, however, Ripley believes the peak for rates likely came last year.

“Yields might move up marginally from a rangebound perspective, but this is an attractive entry point,” he said.

Net shorts in two-year Treasury futures last week fell to their lowest level since May, data from the Commodity Futures Trading Commission showed, suggesting lowered expectations for yields to spike further.

Others, however, are less certain that the economy will cool or the Fed will be in any hurry to ease monetary policy.

Easing financial conditions – including record high investment grade bond issuance, rising IPO activity, and new all-time highs for the US stock market – will likely continue to push inflation higher over the course of 2024 and undercut the case for rate cuts, warned Torsten Slok, chief economist at Apollo Global Management, in a March 1 note.

“The reality is that the US economy is simply not slowing down,” he said.

Economists polled by Reuters expect the US to have added 200,000 jobs in February, after a blockbuster 353,000 jobs added in the previous month. The US consumer price report, slated for March 12, is expected to show prices growing by 0.4% in February. Consumer prices grew at a faster-than-expected rate of 0.3% in the previous month.

“The market is going to be most sensitive to rates and rates are going to be sensitive to inflation, so we’re watching inflation more closely than anything right now as the predominant risk for markets,” said Michael Reynolds, vice president of investment strategy at Glenmede. “The next CPI report is going to be very closely watched.”

(Reporting by David Randall and Davide Barbuscia; Additional reporting by Lewis Krauskopf; Editing by Ira Iosebashvili and Chizu Nomiyama)

US dollar’s strength to persist as markets eye cautious Fed

BENGALURU, March 6 – A strong US dollar will maintain the status quo in the near term, as markets brace for a risk the Federal Reserve’s first interest rate cut gets delayed to the second half of this year, according to a Reuters poll of foreign exchange strategists.

Shrugging off a weakening trend late last year, the dollar has gained against nearly every currency tracked by traders and investors, and is up nearly 2.5% for the year.

Much of the greenback’s recent strength is based on stronger-than-expected US economic performance and receding calls for early Fed rate cuts. The timing of the latter is likely to have a bigger say on the currency’s moves in the near term.

“Over the next three months, I think we’re probably going to see the dollar hold in the ranges we’ve been seeing since the start of the year,” said Shaun Osborne, chief currency strategist at Scotiabank.

“If we’re in a situation where instead of the soft landing, it’s a no-landing scenario, that potentially reduces rate cut opportunities for the Fed quite significantly over the balance of this year, in which case the dollar probably stays relatively strong.”

Despite trader positioning data showing speculators increasing their net long dollar bets to the highest since last November, analysts in a Reuters March 1-6 poll were somewhat divided on how positioning will look over the next three months.

Among 66 analysts who answered an additional question, a slim majority of 35 expected not much change, while 17 predicted a decrease in net longs. Eleven said an increase in net longs and only three said a reversal to net shorts.

“One thing that’s happened this year is investors have had a hard time playing with the dollar and they’re looking for trades that…take the dollar out of it. I think that’s the way it will continue to lean,” said Dan Tobon, head of G10 FX strategy at Citi.

“Over the coming three months, we’ll have a marginally weaker dollar, but not get the type of flows that really create stretched positioning situations off the back of that.”

While currency strategists still expected the greenback to weaken against most major currencies over a 12-month period, median forecasts showed no big change to analysts’ predictions from a February poll.

The euro, down around 1.5% for the year, was forecast to gain 3.0% to trade around USD 1.12 in a year. The common currency was last changing hands around USD 1.09 on Wednesday.

Even the battered Japanese yen, which has lost nearly a third of its value since 2021, was expected to gain over 9.0% in 12 months to trade at 137.00/dollar.

After failing to make any headway against the greenback in 2023, the Aussie and Kiwi dollars were predicted to gain around 7.3% and 5.0% respectively, recouping their 2024 losses and trading higher against the US dollar in coming months.

The Australian dollar and the New Zealand dollars – last trading around USD 0.65 and USD 0.61, respectively, on Wednesday – were forecast to rise to USD 0.70 and USD 0.64 by end-Feb.

(Reporting by Hari Kishan; Polling by Sujith Pai, Pranoy Krishna and Veronica Khongwir; Editing by Ross Finley and Sharon Singleton)

Risk rally comes to shuddering halt

March 6 – Maybe some of the recent exuberance was of the irrational variety.

The selloff across risk assets on Tuesday will almost certainly put Asian markets on the defensive on Wednesday: Asian stocks had their worst day since January, the Nasdaq lost 1.7%, and bitcoin slumped 9% after briefly touching a new high.

The regional calendar includes South Korean inflation and Australia’s fourth-quarter GDP, while China’s annual National People’s Congress continues into its second day.

But Wednesday’s tone will likely be set by Tuesday’s global market moves.

The ‘risk off’ nature of Tuesday’s trading was underscored by the fall in Treasury yields to one-month lows and gold rising for a fifth day to an all-time high of USD 2,141 per ounce.

There were several drivers behind the selloff, including weak US service sector figures, caution ahead of Fed Chair Jerome Powell’s Congressional testimony on Wednesday, and a suspected arson attack at Tesla’s Gigafactory in Berlin.

Perhaps most alarming, however, was the report by research firm Counterpoint that Apple’s iPhone sales in China fell 24% year-on-year in the first six weeks of this year, during which time domestic rival Huawei saw unit sales rise by 64%.

This could fan fears of a slowdown in demand for the US company, whose revenue forecast for the current quarter was USD 6 billion below Wall Street expectations. China, Hong Kong and Taiwan account for around a fifth of Apple’s total sales.

It is also a reminder of the trade tensions between the United States and China, which could intensify further if Donald Trump gets the keys to White House again and follows through on his pledge to slap huge tariffs on Chinese goods.

Investors will have noted official reports in China that Beijing is targeting annual GDP growth this year of around 5% and aims to increase defence spending by 7.2%.

Staying in China, struggling property developer China Vanke said it has funding in place to repay USD 630 million in dollar notes due next week, amid more selling pressure on its bonds as concern mounts over its liquidity.

China’s No.2 property developer by sales said the repayment process was “orderly”. But again, this is just a reminder of the deep hole China’s property sector is in.

Yet Chinese stocks rose for a fifth day – the CSI 300 index of blue chips is now up 13 out of the last 15 days – and the 10-year Chinese government bond yields slid to a new all-time low.

According to Reuters polls, data on Wednesday should show Australia’s GDP grew at a 1.4% annual pace in the final quarter of last year, compared with 2.1% in the prior quarter, while annual inflation in South Korea inched up to 2.9% in February from 2.8%.

Here are key developments that could provide more direction to markets on Wednesday:

– China National People’s Congress

– Australia GDP (Q4)

– South Korea inflation (February)

(By Jamie McGeever)

Oil falls 1% on concerns over China’s economic growth plan

NEW YORK, March 5 – Oil prices fell nearly 1% on Tuesday, pressured by skepticism around China achieving its economic growth target and investors’ declining risk appetite despite support from a weaker US dollar.

Brent crude futures settled 76 cents, or 0.9%, lower at USD 82.04 a barrel, their fourth straight decline. US West Texas Intermediate crude futures fell 59 cents, or 0.8%, to USD 78.15 a barrel.

Both benchmarks had dropped by more than a dollar during the session.

Weighing on prices, China, the world’s biggest oil importer, set an economic growth target for 2024 of around 5%. While the target is similar to last year’s goal and in line with analysts’ expectations, the lack of big-ticket stimulus plans to prop up the country’s struggling economy disappointed investors.

“The growth target is OK, but the missing part is how they want to achieve that – what sort of stimulus is unclear for now,” UBS analyst Giovanni Staunovo said.

Risk-off sentiment in the broader financial markets also put pressure on prices, Staunovo added. Gold prices hit a record high on Tuesday on rising bets for a US interest rate cut in June, while Wall Street fell on weakness in megacap stocks.

Providing some support to oil prices, the US dollar slipped on easing growth in the services sector. A cheaper greenback typically supports oil prices by lifting demand from investors holding other currencies.

“Beyond that, the market is really just looking for the next headline here, with the upcoming storage reports in focus,” Mizuho analyst Robert Yawger said.

The first of this week’s two US inventory reports, from the American Petroleum Institute industry group, showed US crude stocks rose by 423,00 barrels in the week ended March 1, market sources said, much smaller than the increase of 2.1 million barrels expected by analysts in a Reuters poll.

Official data from the US Energy Information Administration is due on Wednesday at 10:30 a.m. ET (1530 GMT). If the EIA reports a crude storage build, it will be the sixth straight week of rising oil stocks in the country.

(Reporting by Shariq Khan, Alex Lawler, Natalie Grover, Georgina McCartney, and Sudarshan Varadhan; Editing by Jason Neely, Will Dunham, Mark Potter, Aurora Ellis, Marguerita Choy, and David Gregorio)

10-year yields fall to one-month low

March 5 – Benchmark 10-year US Treasury yields fell to a one-month low on Tuesday after data showed US services industry growth slowed slightly and as investors prepared for US jobs data for February due on Friday for further clues on Federal Reserve policy.

Traders will also be focused on testimony by Fed Chair Jerome Powell to Congress on Wednesday and Thursday for any fresh clues on monetary policy.

US services industry growth slowed a bit in February amid a decline in employment. A gauge of prices paid for inputs by businesses also fell to 58.6 from an 11-month high of 64.0 in January.

“The services number is the area the Fed is more focused on,” said Ellis Phifer, managing director of fixed income research at Raymond James in Memphis, Tennessee, adding that the inflation and employment components “are some of the biggest factors.”

A drop in yields before the data also reflects investors positioning ahead of Friday’s jobs report.

“The market is repricing itself ahead of that number,” Phifer said.

Employers added an estimated 200,000 jobs last month, according to economists polled by Reuters.

It will follow much stronger-than-expected gains of 353,000 jobs in January that analysts have said was likely due in part to seasonal factors.

Other economic releases due this week will include the Job Openings and Labor Turnover Survey (JOLTS) on Wednesday.

Traders are evaluating when the US central bank is likely to begin cutting interest rates as growth remains relatively strong and inflation gets closer to the Fed’s 2% annual target.

Fed funds futures traders see a 71% probability that the Fed will begin cutting rates in June, up from 64% on Monday, according to the CME Group’s FedWatch Tool.

Benchmark 10-year yields were last down 8 basis points on the day at 4.137% and got as low as 4.112%, the lowest since Feb. 8.

Two-year yields dropped 6 basis points to 4.550%. The inversion in the yield curve between two-year and 10-year notes deepened by 2 basis points to minus 42 basis points.

The Fed accepted USD 444.47 billion in its reverse repurchase agreement operation on Tuesday. Banks and investors have been cutting the amount they loan to the Fed’s reverse repo facility as they find other securities with more attractive rates.

(Reporting by Karen Brettell; editing by Jonathan Oatis and Will Dunham)

Mounting US rate cut bets fuel gold to record highs

March 5 – Gold scaled a record high on Tuesday, moving further above USD 2,100 per ounce in a rally sparked by growing bets for a US interest rate cut in June and on safe-haven demand due to the conflict in the Middle East.

Spot gold gained 0.8% to USD 2,132 per ounce as of 02:13 p.m. ET (1913 GMT), having hit a record USD 2,141.59 earlier.

US gold futures settled about 0.7% higher at USD 2,141.9.

Bullion last hit a record high in December at USD 2,135.40.

“The big reason here is that we’re seeing the market increasingly believing that a Fed rate cut is nearer rather than further away,” said Bart Melek, head of commodity strategies at TD Securities.

“Markets have to be a little bit more convinced for gold to move higher, but ultimately in the second quarter, we do think it can go to over USD 2,300 plus.”

Gold, often used as a safe store of value during times of political and financial uncertainty, has climbed over USD 300 dollars since the start of the Israel-Hamas war.

“Geopolitical risks emanating from the Red Sea and a year with a dense election calendar globally will likely see continued strength in retail demand for gold,” Nitesh Shah, commodity strategist at WisdomTree, said.

“We wouldn’t be surprised if gold gives back some of these gains as the US Federal Reserve talks down imminent cuts, but once rate cuts look certain, we expect gold to trade significantly higher.”

Fed Chair Jerome Powell’s congressional testimony on Wednesday and Thursday will be closely watched for more clarity on the US interest rate path. The next major US economic release will be February’s employment report due on Friday.

Traders currently see a 70% chance that the Fed will start cutting rates by June, according to the CME FedWatch tool.

Gold is pressured when high interest rates to tame inflation raise returns on competing assets such as bonds and boost the dollar, making the precious metal costlier for overseas buyers.

Spot silver eased 0.8% to USD 23.70 per ounce, having hit its highest since Dec. 28 earlier in the session.

Other precious metals fell, with platinum slipping 1.8% to USD 881.23 per ounce, and palladium shedding 1.1% to USD 949.68.

(Reporting by Anjana Anil and Ashitha Shivaprasad in Bengaluru; Additional reporting by Swati Verma; Editing by Veronica Brown, Shailesh Kuber, Tasim Zahid, and Shounak Dasgupta)

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