U.S. dollar scales multi-month highs
Platinum deficit in 2023 to be deeper than expected - WPIC
Platinum, palladium rise over 1%
(Adds comment and updates prices)
March 8 (Reuters) - Gold prices hovered near a one-week low on Wednesday after Federal Reserve Chair Jerome Powell said U.S. interest rates might need to go higher than expected to control sticky inflation.
Spot gold was nearly flat at $1,814.10 per ounce by 1253 GMT, after hitting its lowest since Feb. 28 at $1,809.27. Following Powell’s remarks on Tuesday, prices fell nearly 2%.
U.S. gold futures were down 0.1% to $1,818.70.
Powell reverting to a higher-for-longer stance took the wind out of gold as the markets now expect higher rates, StoneX analyst Rhona O’Connell said.
The Fed will likely need to raise rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation, Powell said on the first day of his semi-annual two-day testimony before Congress.
Gold’s appeal tends to dim when rate hike expectations rise because higher rates increase the opportunity cost of holding non-yielding bullion.
Market participants are now mostly expecting a 50 basis-point hike at the Fed’s March 21-22 policy meeting.
The U.S. dollar scaled multi-month highs, making gold less attractive to overseas buyers.
Investors are also watching for the ADP National Employment Report at 1315 GMT and the Job Openings and Labor Turnover Survey (JOLTS) at 1500 GMT, followed by nonfarm payrolls (NFP) data on Friday.
In February, global gold ETFs (exchange traded funds)suffered more losses led by European funds while North American funds saw small outflows for the first time in two months, World Gold Council said.
Spot silver gained 0.4% by $20.13 per ounce, platinum added 0.8% to $944.37, and palladium rose 1.4% to $1,405.97.
A global deficit of platinum in 2023 will be deeper than previously expected due to strong industrial demand, the World Platinum Investment Council said in a quarterly report. (Reporting by Ashitha Shivaprasad and Kavya Guduru in Bengaluru; Additional reporting by Bharat Govind Gautam; editing by Louise Heavens and Jason Neely)
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