Gold dips after Powell reiterates vow to tame inflation

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Gold prices slipped on Thursday after

comments from Federal Reserve Chair Jerome Powell cemented

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expectation around a 75-basis-point rate hike at its upcoming

policy meeting.

The Fed is “strongly committed” to controlling inflation but

there remains hope it can be done without the “very high social

costs” involved in prior inflation fights, Powell said.

Spot gold fell 0.4% to $1,711.05 per ounce by 1:44

p.m. ET (1744 GMT), after hitting a more than one-week high

earlier in the session.

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U.S. gold futures also settled down 0.4% at

$1,720.20.

“Powell’s comments are entirely consistent with the Jackson

Hole Conference, he’s not pushing back against market pricing

for a 75 basis point increase coming at the September meeting,”

said Daniel Ghali, commodity strategist at TD Securities.

“There’s a lot of buying support because of this technical

range around $1,700. But, we’re expecting this level to break in

the near term.”

Fed fund futures are now pricing in a 85% chance of a

75-basis-point rate hike by the Fed at its Sept. 20-21 policy

meeting.

Gold is highly sensitive to rising U.S. interest rates, as

these increase the opportunity cost of holding non-yielding

bullion.

Data showed the number of Americans filing new claims for

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unemployment benefits fell last week to a three-month low,

underscoring the robustness of the labor market.

In the wake of Powell’s comments, the dollar earlier

rose to hover near its recent peak, making gold more expensive

for other currency holders.

Earlier in the day, the European Central Bank raised its key

interest rate by an unprecedented 75 basis points and signaled

further hikes, prioritizing the fight against inflation.

Spot silver was steady at $18.51 per ounce, platinum

rose 1.5% to $879.50 and palladium was up 4.7% at

$2,139.41.

(Reporting by Brijesh Patel in Bengaluru; Editing by Krishna

Chandra Eluri and Shinjini Ganguli)