Gold extends losses on dollar strength; central banks in focus

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Gold prices eased on Wednesday as the

dollar firmed, although bullion still traded in a narrow range

as investors awaited fresh cues from top central banks on their

monetary policy plans, especially from the U.S. Federal Reserve.

Spot gold fell 0.3% to $1,826.41 per ounce by 0528

GMT, extending losses to a fourth straight session. U.S. gold

futures dropped 0.6% to $1,827.40.

The dollar strengthened towards recent two-decade

peaks, making greenback-priced bullion more expensive for buyers

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holding other currencies.

“Gold is content to trade inversely to the U.S. dollar in a

sideways range at the moment, and we’ll need a big directional

move from the greenback to change that,” OANDA senior analyst

Jeffrey Halley said.

Market participants are also eyeing Fed Chair Jerome

Powell’s testimonies to be held in Washington D.C. this week.

“If Powell is hawkish tonight, we could see another bout of

U.S. dollar strength as yields rise again. That would push gold

lower. Otherwise, I foresee minimal impact,” Halley added.

The Fed will likely deliver another 75 basis point (bp) rate

hike in July, followed by a 50 bp rise in September, and won’t

scale back to quarter-percentage point moves until November at

the earliest, according to a Reuters poll.

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Higher interest rates and bond yields increase the

opportunity cost of holding gold, which yields nothing.

Meanwhile, gold could be among assets that may be targeted

in a possible next round of European Union sanctions on Russia,

a draft document showed.

Looking ahead, spot gold may test a support at $1,821 per

ounce, with a good chance of breaking below this level and

falling to $1,812, according to Reuters’ technical analyst Wang

Tao.

Spot silver dropped 1.3% to $21.38 per ounce,

platinum fell 0.5% to $933.36, and palladium

dropped 0.5% to $1,869.20.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by

Uttaresh.V and Sherry Jacob-Phillips)