Gold near 3-month lows as Powell sticks to rate-hike script

Reuters – Gold prices on Thursday hovered close to a three-month low hit in the previous session on renewed talks of interest rate hikes by the US Federal Reserve, but a softer dollar limited losses in bullion.

Spot gold ticked down 0.1% to USD 1,930.74 per ounce by 0446 GMT. US gold futures fell 0.2% to USD 1,941.30.

Fed Chair Jerome Powell in his remarks to lawmakers on Wednesday said further rate increases are “a pretty good guess” of where the US central bank is heading if the economy continues in its current direction.

While higher interest rates dull the appeal for zero-yield bullion, Edward Meir, a metals analyst at Marex said that “the market still believes the central bank is very close to finishing their rate hikes, and that’s why gold hasn’t really done all that much.”

“It’s (gold) a little bit on the defensive, but hasn’t collapsed” and could trade between USD 1,900 to USD 1,980 until the next Fed decision, Meir added.

Markets are pricing in a 72% chance of a 25 basis points (bps) hike next month, according to the CME FedWatch tool.

Atlanta Fed President Raphael Bostic, meanwhile, became the first policymaker to suggest the Fed would need to wait at least past its July meeting to decide on further rate increases.

The dollar index held close to Wednesday’s lows. A weaker dollar usually makes bullion more appealing for overseas investors.

Traders now await weekly US initial jobless claims data at 1230 GMT, an important indicator of the US economy, and the Bank of England‘s rate decision after inflation data came in higher than expected again, with investors split on just how big the new hike will be.

Spot silver was down 0.2% to USD 22.59 per ounce, after hitting its lowest since March 22 in the previous session.

Platinum fell 0.2% to USD 939.45, and palladium shed 0.8% to USD 1,336.81.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips, Nivedita Bhattacharjee and Varun H K)