Gold rises on dollar weakness, dovish comments from Fed's Powell

Gold gained on Wednesday, hovering close to a one-week high hit in the previous session, as a weaker dollar and remarks by Federal Reserve Chair Jerome Powell that the US economy still needed support boosted bullion's appeal.

Spot gold rose 0.2% to $1,808.15 per ounce by 0552 GMT, after hitting its highest since Feb. 16 at $1,815.63 on Tuesday. US gold futures gained 0.1% to $1,808.40.

"Powell was just credible enough on his dovishness... so gold had more room to breathe," said Stephen Innes, chief global market strategist at financial services firm Axi, adding that a weaker dollar was also supporting prices.

Powell told the US Senate Banking Committee that monetary policy still needed to be accommodative with economic recovery "uneven and far from complete". His testimony continues later in the day.

Further supporting gold, the dollar eased against rivals, while benchmark 10-year US Treasury yield also fell.

In the near term, gold will continue to react to the moves in bond yields, Innes said. Easy monetary policy tends to weigh on government bond yields, increasing the appeal of non-yielding gold.

Powell's remarks indicated that "the stimulus trade is unlikely to go away anytime in the next six months," said Michael Langford, director at corporate advisory AirGuide.

A depreciation in the US dollar and potential impact of inflation as a result of stimulus measures will be key drivers for gold, he added.

Investor focus remains on a $1.9 trillion coronavirus relief aid that is expected to pass later this week.

Among other precious metals, silver eased 0.1% to $27.59 an ounce.

Platinum climbed 0.6% to $1,244.97, while palladium added 0.2% to $2,356.29.