Gold prices were down 1 percent Tuesday after the new U.S central bank chairman pledged to stick with gradual interest rate increases. Spot gold was down 1.1 percent at $1,318.22 an ounce by 1:34 pm EST (1834 GMT). Its session low of $1,313.26 was a two-week low.
April US gold futures settled down $14.20, or 1.1 percent, at $1,318.60 per ounce. The dollar strengthened, pressuring gold, after US Federal Reserve chief Jerome Powell told US Congress members that rate hikes should continue despite the added stimulus of tax cuts and government spending.
The current Fed consensus has signaled three to four rate increases this year. "It seemed quite neutral in regards to rates moving forward," said Bob Haberkorn, senior commodities strategist at RJO Futures.
However some analysts said Powell's tone seemed partially hawkish. Higher US interest rates make bullion less attractive to investors since gold does not pay interest.
"One thing that surprised some was that he seemed to directly mention the stock market and recent volatility as something they're not concerned about," said Jason Ware, chief investment officer of Albion Financial in Salt Lake City. Meanwhile, silver fell 1.43 percent at $16.42 an ounce, dipping to $16.32, a two-week low. Palladium lost 2.3 percent at $1,036.97 per ounce while platinum fell 1.5 percent at $984.40 hitting near a two-week low of $976.
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