Gold subdued as investor focus turns to Powell's speech

[BENGALURU] Gold prices inched lower on Thursday as investors turned cautious ahead of US Federal Reserve chair Jerome Powell's speech this week, which could provide cues to the central bank's plans over tapering of economic stimulus.

Spot gold fell 0.1 per cent to US$1,788.17 per ounce by 3.16am GMT. Prices fell 0.7 per cent in the previous session, its biggest one-day decline in more than two weeks.

US gold futures were little changed at US$1,789.80.

The dollar index inched higher, weighing on the greenback-denominated bullion.

"You're probably going to see a continued consolidation (in gold), but likely to the downside until we get past Jackson Hole," said Edward Moya, senior market analyst at Oanda.

Mr Powell is scheduled to speak at the Fed's annual economic symposium at Jackson Hole, Wyoming, on Friday, in which the markets will look for guidance on the central bank's move to dial back its bond-buying programme.

While a growing number of Fed officials have been actively discussing the likelihood of trimming pandemic-era stimulus, the rise in coronavirus' Delta variant has cast a shade of uncertainty over that view.

"Once we are beyond Jackson Hole the market is still going to anticipate that the Fed is going to taper asset purchases, but they're going to disconnect interest rate hikes from that," Mr Moya added.

This low interest rate environment is likely to last longer and should support gold prices, he added.

Lower interest rates decrease the opportunity cost of holding non-yielding gold.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.3 per cent to 1,001.72 tonnes on Wednesday, its lowest level since April 2020.

Silver was little changed US$23.85 per ounce, while platinum fell 1 per cent to US$986.35.

Palladium slipped 1.5 per cent to US$2,393.22.

REUTERS