Gold prices moved in a tight range on Wednesday after two-straight sessions of declines, as investors refrained from making large bets ahead of Federal Reserve Chairman Jerome Powell’s congressional testimony.
Spot gold held its ground at $1,937.26 per ounce by 0248 GMT.
US gold futures were almost unchanged at $1,948.40. “The expected sustained (Fed) tightening bias is weighing on gold.
In this light, Chairman Powell’s testimony could have a major short-term impact on the market,“ said Clifford Bennett, chief economist at ACY Securities.
While gold is considered a hedge against inflation, interest-rate hikes raise the opportunity cost of holding non-yielding bullion.
Powell delivers a semi-annual monetary policy testimony to the US House Financial Affairs Committee at 1400 GMT and market participants will be looking out for the central bank’s thinking on need for further interest rate increases amid hawkish remarks from policymakers.
Two Federal Reserve policymakers and an economist nominated to join them on the Fed’s Washington-based board on Tuesday said their focus is on bringing down too-high inflation so that the US economy can get back to sustainable growth.
US Treasury yields, meanwhile, hovered near Tuesday’s close as investors priced in market expectations that the Fed is near the end of its rate-hiking cycle.
“Gold should be viewed at the moment like a bright coloured beach ball that some are trying to push under the water. They can win only for so long,” Bennett further said, adding current levels look like good buying for the medium to long term.
Traders are now pricing in an about 78% chance of a Fed rate hike in July, according to the CME Fedwatch tool.
Among other precious metals, spot silver fell 0.3% to $23.1177 per ounce, platinum shed 0.5% to $957.93, while palladium was flat at $1,379.86.