As of 04:23 GMT, spot gold prices were unchanged at $2,114.59 an ounce, trading close to Monday’s high of $2119.69, which was reached on December 4. U.S. gold futures, meanwhile, decreased by 0.2% to $2,121.60.
Gold prices hovers near 3-month peak as eyes on Jerome Powell’s testimony
Supported by muted U.S. manufacturing and construction spending, gold prices remained close to a three-month high on Tuesday. Investors were waiting for Federal Reserve Chair Jerome Powell’s speech and important jobs data later this week.
As of 04:23 GMT, spot gold was unchanged at $2,114.59 an ounce, trading close to Monday’s high of $2119.69, which was reached on December 4. U.S. gold futures, meanwhile, decreased by 0.2% to $2,121.60.
During an afternoon auction on Monday, the benchmark gold price in London reached an all-time high of $2,098.05 per troy ounce.
“This rally in gold was triggered by the softer-than-expected U.S. data and the pullback in real rates… but there has been a general bias to buy dips and a positive underlying investor sentiment towards gold that has also made the market vulnerable to the upside,” Joni Teves, a strategist at UBS, said.
According to data released this week, consumer confidence remained low and U.S. manufacturing fell even more in February, even as inflation started to gradually fall.
Raphael Bostic of the Fed, meantime, noted on Monday that the economy and labor market are “prospering” and that the bank is not under any immediate pressure to lower interest rates.
In a week full of jobs data, investors’ attention is now focused on Fed Chair Powell’s two days of congressional testimony on Wednesday and Thursday. They are looking for additional hints about the state of the US economy and the probable timing of the central bank’s rate decreases.
Interest rates that are lower increase the allure of non-yielding bullion.
As of March 4, holdings in SPDR Gold Trust, the largest gold-backed exchange-traded fund globally, had decreased 10% from the prior year.
“Even though gold ETFs have continued to sell, the pace of the selling has been reasonably measured, which suggests these are tweaks to the composition of the investor portfolio rather than investors losing faith in gold necessarily,” Teves of UBS stated.
Palladium lost more than 1% to $950.13 per ounce, while spot platinum slid 0.7% to $890.95.
According to ANZ analysts, “Platinum should regain its luster amid strong auto sales and the ongoing substitution of Platinum for Palladium.”
Spot silver dropped to $23.71 by 0.8%.
Frequently Asked Questions (FAQs)
What was the spot gold price as of the latest update?
The spot gold price was flat at $2,114.59 per ounce.
How have U.S. gold futures moved recently?
U.S. gold futures edged 0.2% lower to $2,121.60.
Why are gold prices near a three-month peak?
Gold prices are near a three-month peak due to subdued U.S. manufacturing and construction spending, alongside the anticipation of Federal Reserve Chair Jerome Powell’s testimony and key jobs data.
What impact do U.S. manufacturing and construction spending have on gold prices?
The decline in U.S. manufacturing and the easing of construction spending have likely contributed to the recent rally in gold prices, as they may signal economic conditions that could lead the Federal Reserve to adjust interest rates, thus affecting gold’s appeal.
How does Federal Reserve Chair Jerome Powell’s testimony potentially affect gold prices?
Jerome Powell’s testimony could provide insights into the U.S. economy’s health and the Federal Reserve’s future monetary policy, which could influence investor sentiment and gold prices, especially if there are hints at rate adjustments.
What was London’s gold price benchmark’s recent record?
London’s gold price benchmark hit an all-time high of $2,098.05 per troy ounce.
How do lower interest rates influence gold’s appeal?
Lower interest rates increase gold’s appeal because they reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors looking for safe-haven assets or hedging against inflation.
What trends are seen in gold-backed ETFs, specifically SPDR Gold Trust’s holdings?
The holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were down 10% from the previous year as of March 4, indicating a slowdown in selling pace and suggesting adjustments in investor portfolios rather than a loss of faith in gold.
How do other precious metals like platinum and palladium compare to gold currently?
Spot platinum fell 0.7% to $890.95 per ounce, and palladium dropped over 1% to $950.13, indicating that while gold prices are near a three-month peak, other precious metals are experiencing declines.
What are analysts at ANZ saying about platinum’s future prospects?
Analysts at ANZ noted that platinum should regain its luster amid ongoing substitution of platinum for palladium and strong auto sales, suggesting a positive outlook for platinum in comparison to palladium and potentially gold.
