Gold futures ended unchanged on Monday, holding above the $1,850 an ounce mark after snapping a run of four straight weekly declines.
Investors awaited testimony this week by Federal Reserve Chair Jerome Powell for hints on the path for interest rates.
- Gold for April delivery GC00, -0.14% GCJ23, -0.14% ended flat at $1,854.60 an ounce. On Friday, the most-active contract posted a weekly climb of nearly 2.1% — the first weekly gain in five weeks.
- May silver SIK23, -0.72% lost 10 cents, or 0.5%, to $21.135 an ounce.
- April platinum PLJ23, -0.05% fell nearly 0.1% to $978.60 an ounce, while June palladium PAM23, -1.55% declined 1.7% to $1,424.50 an ounce.
- May copper HGK23, +0.10% added 0.5% to $4.0885 a pound.
Gold held ground around the $1,850 level at the start of the week as investors waited for “more clarity on the likely trajectory of the Federal Reserve’s interest rate moves, as well as how well [U.S.] employment is holding up against the current cost pressures,” said Rupert Rowling, market analyst at Kinesis Money, in market commentary.
Monthly data on U.S. nonfarm payrolls will be released Friday. Ahead of that, Powell will testify on Tuesday to the Senate Banking Committee and on Wednesday to the House Financial Services panel. Both hearings are set to begin at 10 a.m. Eastern time.
Powell is expected to sound a tone similar to other Fed officials, emphasizing the need to continue raising interest rates as the central bank works to bring down inflation.
Given how tied up gold has been with the moves of the Fed, these two speeches by Powell will be a “big factor in driving the price of gold,” Rowling said.
Recent comments by Fed officials have “reiterated the need to continue hiking rates until they reach at least 5%, with the battle against persistently high inflation far from over,” he said.
San Francisco Federal Reserve President Mary Daly said on Saturday that bumpy progress on lowering inflation means that interest rates will likely need to be raised further and stay higher for longer.
Read: Fed’s Daly sees need for ‘higher for longer’ interest-rate policy
“In this environment of rising interest rates, gold becomes less attractive to investors due to its lack of yield, so holders of the precious metal will be hoping that Powell doesn’t strike a more hawkish tone than his fellow committee members,” said Rowling.
See: Powell to talk to Congress about the possibility of more interest-rate hikes, not fewer
Last week, gold bounced back “with force, rising more than 2%,” noted Marios Hadjikyriacos, lead investment analyst at XM. “In classic fashion, the precious metal took advantage of the pullback in real yields and the U.S. dollar, although it will be tough for this advance to continue for long in a regime where the Fed is expected to stay restrictive for longer.”
Treasury yields were mixed Monday, after the 10-year rate last week briefly topped the 4% level. Rising yields raise the opportunity cost of holding gold, while a stronger dollar makes commodities priced in the unit more expensive to users of other currencies.