February 27, 2018
PRECIOUS-Gold steady on softer dollar; investors await testimony from Fed's Powell
(Reuters) - Gold prices were steady on Tuesday as the dollar was also little changed while investors awaited U.S. Federal Reserve Chair Jerome Powell's first congressional testimony for clues on the future pace of monetary tightening.
Spot gold was down 0.1 percent at $1,331.86 an ounce at 0448 GMT.
U.S. gold futures were up 0.1 percent at $1,333.55 per ounce.
The dollar index, which measures the greenback against a basket of major currencies, was down 0.1 percent at 89.813. The index has rebounded 1.7 percent since falling to a three-year low of 88.25 on Feb. 16.
"The metal continues to see interest amid stronger global equities, while the correlation to dollar movements has firmed over recent months," MKS PAMP Group trader Sam Laughlin said in a note.
"Inflationary pressures out of the U.S. are likely to see bullion supported over the medium-term."
Powell's debut appearance is seen as critical for financial markets at a time when many investors are nervous about the Fed's policy normalisation following years of stimulus after the financial crisis almost a decade ago.
Many investors expect the Fed to raise interest rates three to four times this year, if U.S. inflation starts to take off, especially as growth is set to get another boost from the Trump administration's tax cuts and spending plans.
"Investors will be keen to hear what Powell has to say particularly over the balance sheet and his views on inflation," ANZ analyst Daniel Hynes said.
Investors are concerned that interest rates might be hiked sooner than expected, Hynes said.
Higher U.S. interest rates could reduce the demand for non-interest bearing bullion as investors seek higher returns in other assets.
Spot gold is expected to break a resistance at $1,339 per ounce and rise more to the next resistance at $1,348, as suggested by its wave pattern and a projection analysis, according to Reuters technical analyst Wang Tao.
Meanwhile, Asian shares extended their recovery on Tuesday, hitting a three-week high as U.S. borrowing costs eased ahead of Powell's highly-anticipated first congressional testimony later in the day.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.21 percent to 831.03 tonnes on Monday from 829.26 tonnes on Friday.
Among other precious metals, silver was down 0.2 percent at $16.62 an ounce.
Palladium was flat at $1,060.85 per ounce, while platinum was down 0.4 percent at $995.74 per ounce.