NEW YORK: Gold dropped nearly 1% to a fresh three-month low on Thursday as the second day of US Federal Reserve Chair Jerome Powell’s testimony was underway, with the possibility of more rate hikes overriding any support from signs of a softer labor market.
Spot gold was down 0.9% to $1,914.20 per ounce by 11:00 a.m. EDT (1500 GMT), set for its fifth straight daily decline for the first time in four months.
US gold futures fell 1% to $1,925.20.
Gold briefly pared some losses after data showed US jobless claims held steady at a 20-month high last week, in what may be an early indication of a softening labor market in the face of the Fed’s aggressive credit tightening, but bullion soon hastened its retreat.
“The Fed and other central banks around the world continuing along their path of fighting inflationary pressures and the expectation that more rate hikes will be needed in the future is really the biggest weight on the gold market at the moment,” said David Meger, director of metals trading at High Ridge Futures.
Further rate increases are “a pretty good guess” of where the central bank is heading if the economy continues in its current direction, Powell said in remarks to lawmakers on Wednesday.
The dollar rebounded from a more than one-month low hit earlier, while Treasury yields rose.
But Powell’s hawkish tilt did little to sway investors who kept bets for only one additional rate increase this year, followed by cuts in January.
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