Gold hits three-month low in hawkish Fed’s shadow

June 22 (Reuters) – Gold dropped nearly 1% to a three-month low on Thursday after US Federal Reserve Chair Jerome Powell’s testimony, with the possibility of more rate hikes overriding any support from signs of a softer labor market.

Spot gold was down 0.9% at USD 1,914.19 per ounce by 2:34 p.m. EDT (1834 GMT) and is set for its fifth consecutive daily decline for the first time in four months.

US gold futures settled 1.1% lower to USD 1,923.70.

Gold briefly pared some losses after data showed US jobless claims held steady at a 20-month high last week, potentially signaling a softening labor market in the face of the Fed’s aggressive rate hikes, but bullion soon hastened its retreat.

“Powell’s message today was that the economy remains resilient, and it is likely we get more rate hikes,” said Tai Wong, a New York-based independent metals trader, who saw gold trading in a new lower range of USD 1,895-USD 1,945 in the short term.

Powell said the central bank would move interest rates at a “careful pace” as policymakers edge towards a stopping point after 10 consecutive raises until their June meeting.

The dollar rebounded from a more than one-month low hit earlier, making gold less attractive, while Treasury yields also gained.

But Powell’s hawkish tilt did little to sway investors who kept bets for only one additional rate increase this year, followed by cuts in January.

Although gold is considered an inflation hedge, high interest rates to curb price pressures dampen the appeal of the zero-yield asset.

Silver fell 0.9% to USD 22.43 per ounce, while platinum was down 2% at USD 922.32, with both hitting multi-month lows.

Palladium shed 4.9% to USD 1,280.87, its lowest since May 2019.

“Palladium was comfortably trading below the USD 1,400 level, once it broke from that level, the technical selling was fairly easy to continue,” said Edward Moya, senior market analyst at OANDA.

(Reporting by Deep Vakil and Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri and Maju Samuel)