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Gold prices hold steady as dollar falters on Jerome Powell testimony

The dollar index surrendered early gains and was hovering near a six-week low,

Gold Prices | Jerome Powell | US Federal Reserve


Photo: Reuters
Photo: Reuters

By Brijesh Patel

(Reuters) - Gold pared initial losses and held steady on Tuesday, closely tracking the dollar as investors digested comments from U.S. Federal Reserve Chairman Jerome Powell, who said the economic recovery was "uneven and far from complete."

Spot gold was steady at $1,809.16 an ounce by 10:49 a.m. ET (1549 GMT), after dropping as much as 0.7% in the session.

U.S. gold futures were little changed at $1,810.

Powell said it will be "some time" before the Fed considers changing policies it adopted to help the economy get back to full employment.

"were in a risk off mood this morning with stocks under notable pressure. That caution and a stronger USD saw gold and especially PGMs (Platinum Group Metals) expand trade lower," said Tai Wong, a trader at investment bank BMO in New York.

"However, Powell's very dovish prepared remarks are turning the tables for the moment, pushing the USD lower and helping gold."

The dollar index surrendered early gains and was hovering near a six-week low, making gold less expensive for holders of other currencies.

But gold might not reverse course to gain substantially "until we get a real spike in inflation expectations or a Fed that talks about controlling the yield curve," said IG Market analyst Kyle Rodda.

Rising yields have challenged bullion's appeal as an inflation hedge especially this year since they increase the opportunity cost of holding gold.

But gold jumped 1.5% on Monday as prospects of rising inflation triggered equity valuation concerns and drove investors towards the safe-haven metal.

Silver dropped 1.8% to $27.66 an ounce, having earlier hit a three-week peak at $28.31.

Platinum slipped 2.5% to $1,240.19, after touching a more than two-week low earlier in the session. Palladium lost 2.3% to $2,365.27.


(Reporting by Brijesh Patel in Bengaluru; Editing by Dan Grebler)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Tue, February 23 2021. 22:47 IST