Gold slips to one-week low as Fed hints at 50 bps rate hike
US Federal Reserve chair Jerome Powell’s hawkish comments on inflation push gold down 1.9% to $1,812.55, with analysts predicting a potential break below $1,800
08 March 2023 - 07:46
byAgency Staff
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Gold prices slipped to a one-week low on Wednesday after US Federal Reserve chair Jerome Powell said interest rates might need to go higher than previously expected to curb inflationary pressures.
Spot gold was down 0.2% at $1,810.84 per ounce by 4.09am GMT. US gold futures fell 0.4% to $1,813.60.
It is anticipated the US Fed will raise interest rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation, Powell said on the first day of his semi-annual, two-day testimony before Congress.
In the aftermath of Powell’s remarks on Tuesday, gold prices had dropped as much as 1.9%, or by more than $30, to $1,812.55.
“Nobody wants to buy gold today following the hawkish remarks from Powell ... there’s also very little gold-selling, with prices pushing slightly lower but without conviction — gold almost looks startled today,” said Matt Simpson, a senior market analyst at City Index.
“A break below $1,800 is on the cards for gold,” he added.
Higher interest rates usually dull gold’s appeal, because they increase the opportunity cost of holding the asset, which bears no interest.
The US central bank had slowed to a 25-basis-point (bps) interest rate hike in its last meeting, after larger rate hikes last year to fight decades-high inflation, but a slew of data in recent weeks spurred concerns that the Fed would persist with monetary policy tightening.
Traders of futures tied to the Fed’s policy rate have priced in a 50 bps rate hike at the Fed’s March 21-22 policy meeting.
The dollar index hit a three-month high, making bullion less affordable for buyers holding other currencies.
Investors are awaiting the US jobs report for February due on Friday.
Spot silver lost 0.5% to $19.95 per ounce, platinum firmed 0.2% to $931.33 and palladium fell 0.2% to $1,384.37.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold slips to one-week low as Fed hints at 50 bps rate hike
US Federal Reserve chair Jerome Powell’s hawkish comments on inflation push gold down 1.9% to $1,812.55, with analysts predicting a potential break below $1,800
Gold prices slipped to a one-week low on Wednesday after US Federal Reserve chair Jerome Powell said interest rates might need to go higher than previously expected to curb inflationary pressures.
Spot gold was down 0.2% at $1,810.84 per ounce by 4.09am GMT. US gold futures fell 0.4% to $1,813.60.
It is anticipated the US Fed will raise interest rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation, Powell said on the first day of his semi-annual, two-day testimony before Congress.
In the aftermath of Powell’s remarks on Tuesday, gold prices had dropped as much as 1.9%, or by more than $30, to $1,812.55.
“Nobody wants to buy gold today following the hawkish remarks from Powell ... there’s also very little gold-selling, with prices pushing slightly lower but without conviction — gold almost looks startled today,” said Matt Simpson, a senior market analyst at City Index.
“A break below $1,800 is on the cards for gold,” he added.
Higher interest rates usually dull gold’s appeal, because they increase the opportunity cost of holding the asset, which bears no interest.
The US central bank had slowed to a 25-basis-point (bps) interest rate hike in its last meeting, after larger rate hikes last year to fight decades-high inflation, but a slew of data in recent weeks spurred concerns that the Fed would persist with monetary policy tightening.
Traders of futures tied to the Fed’s policy rate have priced in a 50 bps rate hike at the Fed’s March 21-22 policy meeting.
The dollar index hit a three-month high, making bullion less affordable for buyers holding other currencies.
Investors are awaiting the US jobs report for February due on Friday.
Spot silver lost 0.5% to $19.95 per ounce, platinum firmed 0.2% to $931.33 and palladium fell 0.2% to $1,384.37.
Reuters
Gold slightly up as investors eye Powell testimony
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Gold heads for best week since middle of January
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