Gold price falls as Powell Testimony lifts Dollar
Gold erased all of last week’s gains on Tuesday 28th Feb as the dollar jumped after Federal Reserve Chair Jerome Powell indicated rate hikes could come at a faster pace in his testimony to a congressional committee.
Spot gold fell 1.6% to $1,818.96 per ounce by 12:30 p.m. ET, its lowest in a week. US gold futures were down 1.5% in New York to $1,827.10 per ounce.
The Fed will likely need to 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 told US lawmakers earlier.
The US dollar index gained almost 1% following Powell’s comments, making bullion less affordable for overseas buyers. US stock indexes also fell after the remarks.
“This direct reference to ‘faster tightening’ even if mitigated by ‘if warranted’ is more of a shove than a nudge, putting the precious metals complex under pressure as the dollar surges,” said Tai Wong, a senior trader at Heraeus Precious Metals in New York, in a Reuters note.
“Gold had already retreated from Friday’s strong close, but so far Powell is more direct and aggressive than market had anticipated,” Wong added.
The US jobs report for February is due on Friday. “If Friday’s jobs data shows significant resilience in the US labour market, it would pave the way for even higher US rates and could unwind the month-to-date gains garnered so far by gold,” predicted Han Tan, chief market analyst at Exinity.
SOURCE:mining.com
