Gold dips as investors await Powell's speech

Credit: REUTERS/KIM HONG-JI

Gold fell on Thursday as investors reassessed their positions, booked profits after a more than 1% jump in the prior session and anticipated fresh stimulus announcements from the U.S. Federal Reserve Chairman could spur an economic revival.

By Diptendu Lahiri

Aug 27 (Reuters) - Gold fell on Thursday as investors reassessed their positions, booked profits after a more than 1% jump in the prior session and anticipated fresh stimulus announcements from the U.S. Federal Reserve Chairman could spur an economic revival.

Spot gold XAU= was down fell 0.7% to $1,939.30 per ounce by 0940 GMT, after rising 1.3% on Wednesday. U.S. gold futures GCv1 declined 0.3% to $1,947.60.

Fed Chair Jerome Powell is scheduled to discuss the Fed's annual conference of central banks at 1310 GMT, with investors watching for inflation and monetary policy clues.

"Gold has rallied for quite some time now and the expectation of more stimulus packages are increasing the possibilities of an economic recovery," said OANDA analyst Craig Erlam.

The Fed has cut interest rates to near zero and introduced unparalleled measures to stimulate the coronavirus-hit economy, contributing to gold's 28% increase so far this year.

Carsten Menke, analyst at Julius Baer, said gold prices might see only "momentary volatility" when Powell speaks.

"Cutting interest rates further doesn't look seem to be on the plate. What investors are expecting is more stimulus packages."

Lower interest rates minimise the opportunity cost of owning non-yielding bullion and weigh on the dollar, rendering gold cheaper for buyers transacting in other currencies.

Gold also benefits as a perceived hedge against possible inflation and currency debasement triggered by the money-printing by global central banks to ease the economic blow from the pandemic.

The metal's latest retreat came despite a cautious mood in European equity markets, with the dollar also down, ahead of the Fed's Jackson Hole virtual conference. MKTS/GLOBUSD/

Elsewhere, silver XAG= was down by 0.9% to $27.28 per ounce and palladium XPD= dropped nearly 1% to $2,175.84, while platinum XPT= rose 0.4% to $932.96 per ounce.

(Reporting by Diptendu Lahiri and Brijesh Patel in Bengaluru; editing by Barbara Lewis)

((Brijesh.Patel1@thomsonreuters.com; Within U.S. +1 651 848 5832, Outside U.S. +91 8067493865; Reuters Messaging: Brijesh.Patel1.thomsonreuters.com@reuters.net))

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