Gold holds ground as markets gauge US rate outlook

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Gold prices steadied on Monday after U.S. Federal Reserve Chair Jerome Powell’s remarks on the likelihood of more interest rate hikes as markets sought direction from economic data this week for confirmation on the rate trajectory.

Spot gold was nearly flat at $1,914.99 per ounce by 0744 GMT as the U.S. dollar index hovered near a 12-week peak. U.S. gold futures gained 0.1% to $1,942.40. [USD/]

Speaking at the annual gathering in Jackson Hole, Wyoming on Friday, Powell left open the possibility of further rate increases to cool still-too-high inflation and stressed the U.S. economy’s surprising strength.

“The general view is that market participants were already priced for a hawkish outcome in the lead-up to Powell’s speech, which allows room for some relief on little surprises,” said Yeap Jun Rong, a market strategist at IG.

“However, much still awaits on a sustained recovery in gold prices for now, given that concerns of re-accelerating inflation on U.S. economic resilience are translating into mounting bets of a November rate hike.”

Cleveland Federal Reserve Bank Loretta Mester on Saturday said beating inflation will probably require one more U.S. rate hike.

Higher rates translate into lower demand for bullion, which yields no interest.

“While Powell’s comments didn’t add to the momentum of Treasury yields, they remain elevated in historical terms and as such they continue to act as a burden on the gold price,” KCM Trade Chief Market Analyst Tim Waterer said in a note.

A series of economic data this week, including the U.S. core PCE inflation and non-farm payroll report, will likely provide a sharper focus on the economy’s strength.

Highlighting investor sentiment toward bullion, data on Friday showed COMEX gold speculators cut net long position in the week ended Aug. 22.

Elsewhere, spot silver fell 0.4% to $24.14 and platinum eased 0.2% to $943.12. Palladium edged up 0.1% to $1,222.86.

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