Gold steadies after sell-off linked to hawkish Fed, stronger greenback

NEW YORK/ LONDON — Gold prices steadied on Wednesday after the previous session’s more than 1% fall following comments by the Federal Reserve’s new chairman that fueled views the US central bank would raise rates four times this year rather than three.

The dollar hit a five- week high versus a basket of currencies, lifted by Fed Chairman Jerome Powell’s upbeat assessment of the US economy on Tuesday.

A strong dollar makes dollarpriced gold costlier for investors using other currencies.

Spot gold was flat at $1,317.94 per ounce by 1:34 p.m. EST (1834 GMT) and was poised to close February down 2%. On Tuesday, it hit the lowest since Feb. 9 at $1,313.26.

US gold futures settled down 70 cents or 0.10%, at $1,317.90 per ounce.

“Even though the dollar is stronger and Treasury yields are higher, the gold market oversold itself yesterday, and now we’re recovering a bit,” said Walter Pehowich, executive vice-president of investment services at Dillon Gage Metals.

Mr. Powell said in his speech that recent data had strengthened confidence that inflation will rise.

Inflation generally supports gold, which is considered a safe store of value when price pressures rise. But raising interest rates to fight inflation makes the non-yielding metal less attractive.

BEARISH SENTIMENT

World stocks tumbled as dismal Chinese and Japanese manufacturing and industrial output data added to the bearish equities sentiment sparked by the US interest rate hike views after Mr. Powell’s comments.

Elevated US debt levels and volatility in stocks could boost gold prices above $1,400 longerterm, according to a Reuters survey of analysts.

Spot gold is expected to break support at $1,317 per ounce and fall to the next support level at $1,303, as suggested by its wave pattern and a projection analysis, Reuters technical analyst Wang Tao said.

“People are looking to buy gold on dips, so I think it will be supported down at $1,300,” a Hong Kong-based trader said.

Silver lost 0.20% to $16.39 an ounce, close to a 5.2% monthly decline. Palladium rose 0.80% at $ 1,043.70, but headed for a 2% monthly drop. Platinum was flat $983.10 per ounce, after dropping to a two-week low of $ 972.50, declining 2% for the month. —