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Last Updated : Jul 10, 2019 10:57 AM IST | Source: Reuters

Gold slips as dollar strengthens ahead of Jerome Powell testimony, FOMC minutes

Spot gold was down 0.4% to $1,392.50 per ounce as of 0410 GMT.

Gold prices eased on July 10 as the dollar climbed higher on expectations of a less dovish US Federal Reserve, ahead of a testimony from the its Chairman Jerome Powell.

Spot gold was down 0.4% to $1,392.50 per ounce as of 0410 GMT.

US gold futures slipped 0.4% to $1,394.90 an ounce.

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"A stronger US dollar is clearly weighing on gold prices. Overall, it appears that the markets are backing away from their more dovish stance given that we have important minutes being released by the US Fed," said Michael McCarthy, chief market strategist, CMC Markets.

"Also, people are locking in gains and reducing positions ahead of those key events," he added.

The minutes from Fed's previous meeting will be released later in the day.

The dollar edged toward a three-week high against a basket of major currencies on Wednesday, as fading expectations of an aggressive US interest rate cut pushed Treasury yields higher.

A stronger dollar makes gold costlier for holders of other currencies.

Further gains in the greenback depend on the tone Federal Reserve Chairman Jerome Powell strikes during two days of Congressional testimony.

"Fading US rate cuts expectations have imposed considerable headwinds on bullion's appeal as traders pivot towards a strong recovery in the US dollar," Phillip Futures said in a note.

Expectations for a 50 basis point rate cut this month have evaporated, but investors still expect a 25 basis point cut due to weak inflation and trade war worries.

Lower interest rates would support gold because they reduce the opportunity cost of holding non-yielding bullion.

On the trade front, White House economic adviser Larry Kudlow said US and Chinese trade officials held a "constructive" phone conversation on Tuesday.

Commerce Secretary Wilbur Ross said the US government will issue licenses to companies seeking to sell goods to China's Huawei where there is no threat to national security.

Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.22% to 794.08 tonnes on Tuesday from 795.80 tonnes on Monday.

Spot gold is biased to break a support at $1,387 per ounce and fall into a range of $1,366-$1,377, according to Reuters technical analyst Wang Tao.

Among other precious metals, silver fell 0.2% to $15.07 per ounce and palladium lost 0.1% to $1,545.50 per ounce.

Platinum was steady at $806 per ounce.
First Published on Jul 10, 2019 10:40 am
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