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U.S. dollar index hits 3-month high
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Break below $1,800/oz on the cards for gold - analyst
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Perth Mint's Feb gold sales fall to over 2-year low
(Adds details and updates prices)
By Kavya Guduru
March 8 (Reuters) - Gold prices slipped to a one-week
low on Wednesday after U.S. Federal Reserve Chair Jerome Powell
said interest rates might need to go higher than expected to
curb inflationary pressures.
Spot gold eased 0.1% to $1,812.44 per ounce, as of
0634 GMT. U.S. gold futures edged down 0.2% to $1,816.50.
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.
In the aftermath of Powell's remarks on Tuesday, gold prices
had dropped as much as 1.9%, or by more than $30, to $1,812.55.
"Nobody wants to buy gold today following the hawkish
remarks from Powell... there's also very little gold-selling,
with prices pushing slightly lower but without conviction – gold
almost looks startled today," said Matt Simpson, a senior market
analyst at City Index.
"A break below $1,800 is on the cards for gold," he added.
Higher interest rates usually dull gold's appeal because
they increase the opportunity cost of holding the asset which
bears no interest.
The Fed slowed to a 25 basis-point rate increase at its last
meeting, after bigger hikes last year to fight decades-high
inflation, but a slew of data in recent weeks spurred concerns
that the U.S. central bank would persist with monetary policy
tightening.
Markets are now pricing in a 50 basis-point hike at the
Fed's March 21-22 policy meeting. The dollar index hit a three-month high, making
bullion less affordable for buyers holding other currencies. Meanwhile, Australia's Perth Mint reported gold product
sales in February fell to their lowest in more than two years,
while silver sales rose about 20% on the month.
Spot silver was down 0.1% at $20.03 per ounce,
platinum added 0.8% at $936.72 and palladium rose
0.3% to $1,391.40.
(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu
Sahu and Sherry Jacob-Phillips)
