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Powell due to speak at 1700 GMT
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U.S. dollar index down slightly
(Updates prices)
By Kavya Guduru
Feb 7 (Reuters) - Gold prices rose on Tuesday as the
dollar pulled back slightly, with traders awaiting U.S. Federal
Reserve Chair Jerome Powell's speech later in the day for hints
about future rate hikes after last week's strong economic data.
Spot gold was 0.4% higher at $1,874.34 per ounce, as
of 0730 GMT, after hitting its lowest level since Jan. 6 in the
previous session. U.S. gold futures rose 0.4% to
$1,873.00.
"Despite another round of upmove in the dollar and yields,
the downside in gold prices is more limited, which points to
some attempts to stabilise after recent sell-off," said Yeap Jun
Rong, a market analyst at IG. The dollar index eased 0.1% after touching its
highest level in nearly a month on Monday. A weaker greenback
makes dollar-priced gold more attractive for buyers holding
other currencies. Fed funds futures traders now see rates rising above 5% in
May after a stronger-than-expected U.S. jobs report sparked
worries that the U.S. central bank will likely keep interest
rates higher for longer. U.S. Treasury Secretary Janet Yellen said on Monday she saw
a path for avoiding a U.S. recession, with inflation coming down
significantly and the economy remaining strong, given the
strength of the labour market.
Gold prices had shot above the $1,900-an-ounce threshold in
January on hopes of slower Fed rate hikes, but prices have since
retreated.
Market participants will be keenly watching Powell's speech
to see if he sounds hawkish after last week's stunning jobs
data.
"With the Fed taking on a data-dependent stance to guide its
monetary policies, the risks of a hawkish reaction from
policymakers to recent economic data remains on the table," Yeap
said.
Gold is sensitive to high interest rates, which lift the
opportunity cost of holding the non-yielding asset.
Spot silver rose 0.5% to $22.37 per ounce, platinum was little changed at $971.63 and palladium edged
0.1% lower to $1,596.53.
(Reporting by Kavya Guduru in Bengaluru; editing by Uttaresh.V
and Subhranshu Sahu)
