SINGAPORE: Gold prices firmed in Asian trade on Wednesday after US Federal Reserve Chair Jerome Powell’s pledge to keep interest rates near zero for some time pushed the dollar towards a one-week low.
Spot gold rose 0.2% to $1,782.46 per ounce by 0751 GMT and US gold futures gained 0.3% at $1,782.40.
Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
It fell 6% last week after the Fed struck a hawkish tone at its meeting and signalled interest rate hikes in 2023.
Powell’s comments on Tuesday reaffirmed intent to encourage a “broad and inclusive” job market recovery, and not raise interest rates based only on fears of coming inflation.
“Economic numbers are just showing a sign of recovery... can’t say they will be consistent in the coming period. That has been a support for gold,” said Ajay Kedia, director at Kedia Commodities in Mumbai.
However, the gold market may stay under pressure nonetheless, after recent moves in Fed “dot plot” projections shifted focus towards the tapering timetable, Standard Chartered analysts said.
“A tapering timetable is still uncertain but is being discussed, which is a downside risk for gold prices,” they told clients.