June 20 (Reuters) – Gold prices were stuck in a relatively narrow range on Tuesday as market participants looked forward to an upcoming testimony by US Federal Reserve Chair Jerome Powell later this week, while a firmer dollar also kept bullion in check.
Spot gold held its ground at USD 1,950.19 per ounce by 0447 GMT, while US gold futures fell 0.5% to USD 1,962.00.
“The more cautious risk tone in today’s session may aid to drive some safe-haven flows into gold, but while that can provide some short-term cushion, the upside could still be capped,” IG market analyst Yeap Jun Rong said.
Stocks in Asia fell as investors worried that China’s latest rate cut was not enough to boost confidence in the weakening economy and awaited a wider stimulus package by Beijing.
Markets were also focusing on Powell’s congressional testimony on Wednesday and Thursday for further guidance on interest rates following the Fed’s hawkish pause on monetary policy tightening last week.
While gold is considered a hedge against inflation, interest rate hikes raise the opportunity cost of holding non-yielding bullion.
“With expectations previously pricing for a more dovish outcome from the Fed, the recent pushback by the central bank has been disappointing to some, which translates to some offloading in place,” IG’s Jun Rong said.
The US dollar, meanwhile, held firm making bullion less attractive for overseas buyers.
Expectations of a rate cut this year are waning, but “the Fed will be ending its hiking cycle sometime this year and start cutting next year. This constitutes a structural support for gold over the medium and long term,” ANZ said in a note.
Among other precious metals, spot silver was flat at USD 23.9284 per ounce and palladium fell 0.8% to USD 1,396.01.
Platinum dropped 0.6% to USD 969.82, set for a third consecutive session of losses.
(Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips and Sohini Goswami)