Gold steady on softer US dollar; investors await testimony from Fed's Powell

[BENGALURU] Gold prices were steady on Tuesday as the dollar was little changed while investors awaited US Federal Reserve Chair Jerome Powell's first congressional testimony for clues on the future pace of monetary tightening.

Spot gold was up 0.1 per cent at US$1,334.26 an ounce at 0752 GMT.

US gold futures were up 0.2 per cent at US$1,335.90 per ounce.

The dollar index , which measures the greenback against a basket of major currencies, was down 0.1 per cent at 89.723. The index has rebounded 1.7 per cent since falling to a three-year low of 88.25 on Feb 16.

"The market is fairly quiet overall and is on a wait and see mode ahead of the new Fed chairman's speech tonight," a Hong Kong based trader said.

"All eyes would be on interest rates and the US dollar," the trader said.

Powell's debut appearance is seen as critical for financial markets at a time when many investors are nervous about the Fed's policy normalisation following years of stimulus after the financial crisis almost a decade ago.

Many investors expect the Fed to raise interest rates three to four times this year, if US inflation starts to take off, especially as growth is set to get another boost from the Trump administration's tax cuts and spending plans.

"Investors will be keen to hear what Powell has to say particularly over the balance sheet and his views on inflation," ANZ analyst Daniel Hynes said.

While inflation worries could spur safe-haven gold buying, rising interest rates would pressure the metal because bullion pays no interest.

"Initial support for the metal holds around US$1,325-US$1,330, while resistance cuts in broadly between US$1,340-US$1,345," MKS PAMP Group trader Sam Laughlin said in a note.

Spot gold is expected to break a resistance at US$1,339 per ounce and rise more to the next resistance at US$1,348, as suggested by its wave pattern and a projection analysis, according to Reuters technical analyst Wang Tao.

Meanwhile, global shares held firm near three-week highs on Tuesday as US borrowing costs eased ahead of Powell's awaited first congressional testimony later in the day.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.21 per cent to 831.03 tonnes on Monday from 829.26 tonnes on Friday.

Among other precious metals, silver was down 0.2 per cent at US$16.63 an ounce.

Palladium was flat at US$1,060.70 per ounce, while platinum was down 0.1 per cent at US$998.40 per ounce.

REUTERS