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Gold hovers near 3-month peak as eyes on Jerome Powell’s testimony

gold lingers in proximity to a zenith unseen in three months, casting a watchful eye on the forthcoming discourse from Jerome Powell, the Federal Reserve Chair. The precious metal’s stability is anchored by a restrained trajectory in U.S. manufacturing and construction spending. Investors stand in anticipation, eager for Powell’s testimony and pivotal employment data slated for later this week.

As the clock ticks, spot gold maintains its equilibrium at $2,114.59 per ounce, a static tableau as of 0423 GMT. This stance mirrors the levels set on Monday at $2119.69, signifying a pinnacle not witnessed since December 4. In tandem, U.S. gold futures experience a marginal dip of 0.2%, resting at $2,121.60.

Monday’s afternoon auction witnessed London’s gold price benchmark soaring to an unprecedented height of $2,098.05 per troy ounce, an emblematic moment etched in the annals of gold trading.

The catalyst for this surge in gold values can be traced to the underwhelming U.S. data and the retraction of real rates. UBS strategist Joni Teves opines, “There exists a propensity to buy on market downturns, fostering a favorable underlying sentiment among investors, rendering the market susceptible to upward shifts.”

Recent data lays bare a continued slump in U.S. manufacturing throughout February, coupled with a gradual abatement in inflation. Simultaneously, consumer sentiment remains lackluster.

In a counterpoint, Federal Reserve’s Raphael Bostic asserts on Monday that the institution faces no exigency to hastily reduce rates. He accentuates a thriving economy and job market, painting a picture of prosperity.

The spotlight pivots to the two-day congressional testimony by Fed Chair Powell scheduled for Wednesday and Thursday. This event unfolds in the backdrop of a week laden with jobs data, an unfolding narrative where investors hunt for nuanced insights into the U.S. economy’s well-being and potential cues about the central bank’s rate adjustment timeline.

The allure of non-yielding bullion is amplified by a scenario of diminished interest rates. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reports a 10% reduction in holdings compared to the previous year, as of March 4.

Joni Teves from UBS remarks, “While gold ETFs continue to divest, the decelerated pace of divestment suggests portfolio adjustments rather than a wholesale loss of faith in gold.”

Spot platinum undergoes a 0.7% descent to $890.95 per ounce, and palladium takes a downturn of over 1%, settling at $950.13.

Analysts at ANZ posit in a note, “Platinum is poised to reclaim its brilliance amid the ongoing substitution of platinum for palladium and robust auto sales.” Concurrently, spot silver sees a dip of 0.8% to $23.71.