Gold prices declined on Tuesday as investors awaited Federal Reserve Chairman Jerome Powell's testimony before Congress later in the day for clues on the future path of U.S. interest rate hikes.
Spot gold dropped 0.2% to $1,843.25 per ounce by 11:12 GMT. Meanwhile, U.S. futures gold contracts fell 0.3% to $1,848.40. The prices retreated from their highest levels in over two weeks, and the dollar index rose 0.1%, making the metal more expensive for buyers outside the United States.
Powell is set to deliver his first semi-annual testimony before Congress today and tomorrow. Additionally, the U.S. jobs report for February is due on Friday.
Han Tan, chief market analyst at Exinity, stated that gold's path towards further gains will be highly influenced this week by potential hints about monetary policy from Powell's testimony and the upcoming jobs report. He added that if Friday’s job data shows significant resilience in the U.S. labor market, it could pave the way for more interest rate hikes in the U.S., potentially undermining the gains that gold has achieved since the beginning of the month.
Despite gold being a well-known hedge against inflation, higher interest rates impact demand for the metal as they increase the opportunity cost of holding non-yielding assets like gold.
For other precious metals, silver fell 0.3% in spot trading to $20.97, platinum dropped 0.9% to $967.54, and palladium declined 0.7% to $1,430.82.
