Gold prices steady as investors focus on Powell speech for rate guidance

By Arundhati Sarkar

(Reuters) - Gold prices held steady on Tuesday as traders looked ahead to U.S. Federal Reserve Chair Jerome Powell's upcoming speech for more clarity about the central bank's rate-hike plans.

Spot gold was little changed at $1,870.89 per ounce by 1251 GMT, trading in a narrow $10 range. U.S. gold futures were 0.1% lower at $1,876.50.

The dollar gained 0.4%, weighing on gold's appeal as a stronger greenback makes the metal costlier for buyers holding other currencies. [USD/]

The trend in gold remains positive since November and a break above $1,880 could help the metal face resistance at the important $1,915-$1,920 level, said Carlo Alberto De Casa, an external analyst at Kinesis Money.

Powell is scheduled to speak at a central bank conference in Stockholm at 1400 GMT, ahead of key U.S. inflation data on Thursday.

Gold prices on Monday hit their highest since early May, when the metal last traded above the key $1,900 mark. Gold has recovered more than $250 from September lows on expectation the Fed would slow the pace of its rate hikes.

Money market bets pointed to a 77% chance of a 25-basis point rate hike to 4.50%-4.75% in the Fed's upcoming policy meeting, with the terminal rate seen slightly below 5% by June.

Elevated interest rates dull gold's appeal as an inflation hedge while raising the opportunity cost of holding the non-yielding asset.

The U.S. inflation data for December could lend further tailwind to gold prices since inflation has been seen slowing down since last summer, Commerzbank analysts said in a note.

"We still envisage a gold price of $1,850 per troy ounce at the end of 2023, though the upside risks to this forecast have increased," the bank said.

Spot silver fell 0.6% to $23.48 per ounce, platinum was down 0.1% to $1,077.51 and palladium gained 0.2% to $1,779.36.

 

(Reporting by Arundhati Sarkar and Seher Dareen in Bengaluru; Editing by Subhranshu Sahu)