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Hawkish testimony could wipe out bullish momentum-analyst
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Focus also on U.S. jobs data due Friday
(Updates prices)
By Ashitha Shivaprasad
March 7 (Reuters) - Gold prices eased on Tuesday, as
investors awaited Federal Reserve Chair Jerome Powell's
testimony later in the day for clues on the future path of U.S.
interest rate hikes.
Spot gold was down 0.4% at $1,839.54 per ounce by
1244 GMT. Prices hit an over two-week peak of $1,858.19 on
Monday. U.S. gold futures fell 0.5% to $1,844.50.
The dollar index gained 0.2%, making bullion less
affordable for overseas buyers.
Powell is due to deliver his semi-annual testimony before
Congress on Tuesday and Wednesday. The U.S. jobs report for
February is due on Friday.
Gold's quest to extend gains is set to be heavily influenced
this week by potential policy clues from Powell's testimonies
and the incoming U.S. payrolls report, said Han Tan, chief
market analyst at Exinity.
If Friday's jobs data shows significant resilience in the
U.S. labour market, it would pave the way for even higher U.S.
rates and could unwind the month-to-date gains garnered so far
by gold, Tan added.
Despite being known as an inflation hedge, higher interest rates dent bullion's appeal as they increase the opportunity cost of holding a zero-yield asset. A hawkish testimony could wipe out any bullish momentum in gold, and prices might shift back to the lows around $1,780-$1,800, Craig Erlam, senior market analyst at OANDA, wrote in a note. In the physical markets, the value of gold reserves held by top consumer China fell to $120.28 billion at the end of February from $125.28 billion at the end of January. "Central banks will continue purchasing gold in 2023. Also, investment demand, in terms of bars and coins, will likely rise this year," said Krishan Gopaul, senior analyst at World Gold Council. Spot silver lost 0.7% at $20.90 per ounce, while platinum edged 1.3% lower at $963.00. Palladium fell 0.7% to $1,429.44. (Reporting by Ashitha Shivaprasad in Bengaluru Editing by Christina Fincher and Shilpi Majumdar)
