Gold hovers near 3-week low as traders await Powell's remarks

By Brijesh Patel

(Reuters) – Gold prices lingered near three-week lows on Thursday as safe-haven demand spurred by the Middle East conflict slowed, while investors awaited comments from U.S. Federal Reserve Chair Jerome Powell for more clues on interest rates.

Spot gold was steady at $1,948.94 per ounce by 0758 GMT after hitting its lowest since Oct. 19 on Wednesday. U.S. gold futures fell 0.2% to $1,954.30.

“Following a strong rally in gold, some unwinding in previous bullish positions seems to be playing out lately, as market participants price out the risks of a wider conflict in the Middle East, while improved risk environment kept safe-haven flows at bay,” IG market strategist Yeap Jun Rong said. [MKTS/GLOB]

Gold prices rose above the key $2,000-per-ounce level last week after escalating tensions in the Middle East lifted demand.

A slew of Fed officials who spoke this week maintained a balanced tone on the U.S. central bank’s next decision, but noted that they would focus on economic data and the impact of higher long-term bond yields.

Powell did not comment on monetary policy or the economic outlook in prepared remarks at a conference on Wednesday. He is scheduled to speak at another conference later in the day.

“He’ll (Powell) probably try and maintain the higher-for-longer narrative because it’s not within their interest to admit to markets that cuts might be coming,” City Index senior analyst Matt Simpson said.

“Gold would have the potential to retest and break above $2,000, but now is not the time.”

Futures point to a roughly 14% chance of another hike by January, but are pricing in an 18% chance that rate cuts could come as early as March, according to the CME FedWatch Tool.

Lower interest rates boost the appeal of zero-yield bullion.

Spot silver fell 0.3% to $22.45 per ounce, while platinum gained 0.4% to $869.60.

Palladium slipped 0.2% to $1,047.88, hovering near its lowest level since 2018.

(Reporting by Brijesh Patel and Anjana Anil in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)

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