Gold prices stagnate as traders wait for Powell's address

17 Oct 2023 , 09:58 AM

In advance of economic data and Federal Reserve Chair Jerome Powell’s speech this week, which may influence future interest rate decisions, gold prices were muted on Tuesday as U.S. Treasury yields extended advances.

Spot gold was down 0.2% to $1,916.20 per ounce, and U.S. gold futures were down 0.2% to $1,929.90.

The U.S. dollar and Treasury yields increased by 0.1%, increasing the cost of non-yielding gold for holders of foreign currencies.

Fed officials may not increase interest rates at their meeting in two weeks, but they also won’t declare that their 19-month effort to boost borrowing costs is done, posing a challenging communication issue for Jerome Powell, the head of the US central bank, this week.

Higher opportunity costs of owning the asset, which pays no interest, normally reduce gold’s appeal when interest rates rise.

Investors are watching the Middle East tensions, which on Friday drove safe-haven gold prices to more than three-week highs, while also waiting for additional U.S. interest rate clues.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported that its holdings decreased 0.80% to 855.45 tonnes on Monday.

According to a mining ministry official, industrial gold production in Mali, one of Africa’s leading producers of the precious metal, is anticipated to equal or possibly surpass its 67.7 tonnes projection for 2023.

With maintenance shutdowns during the quarter to blame, Newcrest Mining, which Newmont Corp. is in the process of acquiring, reported an 18.1% sequential decline in quarterly gold production on Tuesday.

Platinum remained constant at $890.81, palladium increased by 0.1% to $1,144.96, and spot silver fell 0.2% to $22.55 per ounce. 

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