Gold subdued as Fed’s Powell sours pivot hopes

Nov 3 (Reuters) – Gold prices were flat on Thursday, following a volatile session, as hopes of a pivot dissipated after US Federal Reserve Chair Jerome Powell signalled further rise in borrowing costs.

Spot gold was flat at USD 1,635.42 per ounce, as of 0637 GMT, after falling 0.8% on Wednesday.

US gold futures shed 0.8% to USD 1,636.20.

The Fed raised interest rates by 75 basis points on Wednesday, as expected, and signalled it may be nearing an inflection point.

However, Powell soured sentiments by saying the Fed has “ways to go with interest rates before we get to the level that’s sufficiently restrictive” and that it is “premature to discuss pausing.”

“Sentiments are still weak after the hawkish takeaway from the FOMC meeting,” said IG market strategist Yeap Jun Rong.

With the continued shift in landscape towards a higher-for-longer rate, it seems difficult for gold to gain significant traction and the downward trend for prices remains intact, Yeap added.

Gold rose as much as 1.3% after the release of the policy statement at the end of the two-day meet. However, it later gave up gains on Powell’s remarks.

Although gold is considered a hedge against inflation, higher US interest rates increase the opportunity cost of holding the non-yielding asset and boosts the dollar.

The dollar index was slightly lower after touching its highest level since Oct. 24 earlier at 112.19.

Attention now shifts to Friday’s US nonfarm payrolls data, which could provide more cues on the resilience of the labour market.

“If the jobs numbers reinforce this combative rhetoric that we heard from Powell, gold can take out the range floor (at USD 1,615 an ounce) and try to extend downward in a more meaningful way,” said DailyFX currency strategist Ilya Spivak.

Elsewhere, spot silver was steady at $19.27 per ounce, platinum was flat at USD 929.80 and palladium rose 0.7% to USD 1,867.93.

(Reporting by Eileen Soreng in Bengaluru; Editing by Rashmi Aich and Uttaresh.V)