Gold hovers near 2-week low as dollar jumps on Fed's Powell nomination

Gold hovers near 2-week low as dollar jumps on Fed's Powell nomination

Nov 23, 2021

REUTERS [BENGALURU] Gold prices edged up on Tuesday (Nov 23) but hovered close to their lowest level in more than 2 weeks hit in the previous session, as the dollar gained on US President Joe Biden's nomination of Federal Reserve Chair Jerome Powell for a second term.

Spot gold rose 0.2 per cent to US$1,809.40 per ounce by 12.48 am GMT, after sliding 2.1 per cent to its lowest since Nov 5 on Monday (Nov 22).

US gold futures gained 0.2 per cent to US$1,809.60.

The dollar index held near a 16-month peak after Biden on Monday nominated Fed Chair Powell for a second 4-year term, bolstering bets the central bank might raise interest rates sooner to curb growing inflation.

A stronger dollar increases bullion's cost to buyers holding other currencies.

Both Powell and Brainard need to be confirmed in their Fed leadership roles by the Senate, currently controlled by Biden's Democratic party but closely divided.

Gold has benefited from easy monetary policy introduced during the pandemic, but any hike in interest rates should reduce the non-interest bearing metal's appeal as higher interest raises bullion's opportunity cost.

A resurgence of coronavirus cases and a jump in inflation do not at this point warrant a change in the European Central Bank's (ECB) plans to taper its bond purchases in March, ECB policymaker Francois Villeroy de Galhau said on Monday.

US home sales unexpectedly rose in October, though higher prices amid tight supply continued to sideline first-time buyers from the market.

China's economy faces new downward pressures but authorities should avoid rolling out economic measures in a"campaign-like and aggressive" way, Premier Li Keqiang said.

Spot silver rose 0.4 per cent to US$24.25 per ounce. Platinum gained 0.4 per cent to US$1,015.51 and palladium rose 1.3 per cent to US$1,978.97.