Gold range-bound as markets position for Powell’s testimony

GOLD traded in a narrow range on Wednesday (Jun 21) as traders refrained from making big bets ahead of Federal Reserve chairman Jerome Powell’s congressional testimony, which could offer further insight into the central bank’s interest-rate hike plan.

Spot gold was almost unchanged at US$1,936.99 per ounce by 0028 GMT. US gold futures too were little changed at US$1,948.20.

Powell’s congressional testimonies due on Wednesday and Thursday will be scanned for US interest rate outlook.

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.

The Senate Banking committee also released prepared remarks from Fed Board nominee Adriana Kugler, who said returning inflation to the central bank’s 2 per cent target is key to setting a strong foundation for the US economy.

Gold is considered a hedge against inflation, but interest-rate hikes raise the opportunity cost of holding non-yielding bullion.

Traders are now pricing in an about 78 per cent chance of a Fed rate hike in July, according to the CME Fedwatch tool.

US Treasury yields fell on Tuesday, in line with declines in Europe and the UK, as investors priced in market expectations that the Fed is near the end of its rate-hiking cycle, with some sectors of the economy having shown signs of moderation.

Meanwhile, pressure is mounting on China’s cash-strapped local governments as authorities move to shut a private funding route for their financing arms, according to planned new rules and people familiar with their aims, raising credit risks and default worries.

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Gold steady as traders await Powell testimony for rate cues

Spot silver ticked down 0.1 per cent to US$23.1517 per ounce, platinum fell 0.3 per cent to US$959.76, while palladium rose 0.4 per cent to US$1,385.18. REUTERS