Gold prices firmed on Monday despite US Federal Reserve Chair Jerome Powell’s hawkish stance on interest rates as markets sought direction from economic data this week for confirmation on the rate trajectory.
Spot gold was up 0.1% at $1,916.19 per ounce by 0354 GMT, US gold futures gained 0.2% to $1,943.90.
Speaking at the annual gathering in Jackson Hole, Wyoming on Friday, Powell left open the possibility of further rate increases to cool still-too-high inflation and stressed the US economy’s surprising strength.
“The general view is that market participants were already priced for a hawkish outcome in the lead-up to Powell’s speech, which allows room for some relief on little surprises,” said Yeap Jun Rong, a market strategist at IG.
“However, much still awaits on a sustained recovery in gold prices for now, given that concerns of re-accelerating inflation on US economic resilience are translating into mounting bets of a November rate hike.”
Interest rate futures tied to the Fed’s policy rate priced in a more than even chance of tightening at either the November or December policy meetings after Powell’s speech.
Cleveland Federal Reserve Bank Loretta Mester said on Saturday that beating inflation will probably require one more US interest rate hike and then going on hold for “a while.”
Higher rates translate into lower demand for bullion, which yields no interest.
A series of economic data this week, with the US non-farm payroll report on Friday will likely to provide a sharper focus on the economy’s strength.
Highlighting investor sentiment toward bullion, data on Friday showed COMEX gold speculators cut net long position by 20,845 contracts to 25,695 in week ended Aug. 22.
Elsewhere, spot silver fell 0.2% to $24.17 and platinum was down 0.1% at $943.64. Palladium added 0.8% to $1,233.74.
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