Gold lacks momentum as spotlight shifts to Powell’s speech

By Brijesh Patel

(Reuters) – Gold’s momentum faced challenges on Wednesday as investors awaited further clarity on interest rates from the Federal Reserve chief, following conflicting signals from multiple U.S. central bank policymakers.

At 0247 GMT, spot gold remained flat at $1,968.11 per ounce after reaching its lowest point since October 24 on Tuesday. Meanwhile, U.S. gold futures saw little change at $1,974.70.

“The geopolitical risk premium is getting digested out and as central banks turned away from rate hikes, it is ultimately pushing yields lower. So, there’s not much of driving catalysts for gold this week,” explained Ilya Spivak, head of global macro at Tastylive.

A number of Fed officials on Tuesday maintained a balanced tone regarding the central bank’s upcoming decision, emphasizing the need for more economic data and the effects of higher long-term bond yields.

Chicago Fed President Austan Goolsbee highlighted the significant progress in the central bank’s efforts to bring inflation down, while Fed Governor Michelle Bowman reiterated her belief that the central bank will likely need to raise short-term rates again.

Investors are now eagerly awaiting comments from Fed Chair Jerome Powell, who is scheduled to speak on Wednesday and Thursday.

“We’re likely to see a restatement of what Powell said about three weeks ago at the Economic Club of New York, and at FOMC (Federal Open Market Committee) last week, which is that the Fed is going to hold rates at these levels, but the hikes are probably done,” added Spivak.

Futures currently indicate a roughly 15% chance of another rate hike by January, with a 20% chance of potential cuts as early as March, according to the CME FedWatch tool.

Lower interest rates further enhance the appeal of zero-yield bullion.

In other markets, spot silver saw a 0.3% decrease to $22.55 per ounce, while platinum eased 0.1% to $890.42. Palladium also dropped 0.8% to $1,047.03, marking its lowest point since October 2018.

(Reporting by Brijesh Patel and Anjana Anil in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)