Gold creeps lower as Powell testimony looms, copper steadies

By Ambar Warrick

Investing.com -- Gold prices kept to a tight range on Tuesday as markets hunkered down ahead of more cues on monetary policy from a testimony by Federal Reserve Chair Jerome Powell, while copper prices steadied in anticipation of Chinese trade data.

Powell is set to testify before Congress at 10:00 AM ET (15:00 GMT), and is likely to outline the path of interest rates in the coming months. But markets are unsure over what tone the Fed Chair will set, given that while inflation unexpectedly rose in January, other economic indicators showed the U.S. economy was cooling.

Expectations that interest rates will peak sooner, rather than later, saw gold prices stage a strong recovery through the prior week. The yellow metal also saw some safe haven demand amid flashing signals of a recession, as an inversion in the U.S. yield curve deepened.

Spot gold fell 0.1% to $1,844.49 an ounce, while gold futures fell 0.1% to $1,849.95 an ounce by 19:22 ET (00:22 GMT). Both instruments fell 0.3% on Monday.

Rising interest rates bode poorly for gold, given that they increase the opportunity cost of holding non-yielding assets. But signs of cooling economic growth in the U.S. has brewed some speculation over the Fed lacking sufficient economic headroom to keep raising rates.

Still, the prospect of higher interest rates saw gold prices fall sharply from highs hit in January.

Other precious metals retreated slightly on Tuesday. Platinum futures fell 0.1% to $980.0 an ounce, while silver futures fell 0.1% to $21.122 an ounce.

Weakness in the dollar helped limit losses in metal markets, as investors locked in profits in the greenback after a strong February. U.S. Treasury yields also cooled from recent peaks.

Focus this week is also on nonfarm payrolls data for February, with any signs of strength in the jobs market giving the Fed more economic headroom to keep hiking rates.

Among industrial metals, copper prices were steady after ending a highly volatile session in positive territory on Monday. Copper futures fell 0.1% to $4.0728 a pound after rising 0.7% in the prior session.

The red metal was initially hit hard by a softer-than-expected GDP outlook from China. But signs of some economic resilience in the rest of the globe helped traders look past weak demand cues from the world’s largest copper importer.

Focus is now on more cues from China, starting with trade data due later in the day.