Gold slips to 1-week low after Powell strikes hawkish tone

Gold prices slipped to a one-week low on Wednesday after U.S. Federal Reserve Chair Jerome Powell said interest rates might need to go higher than previously expected to curb inflationary pressures.

FUNDAMENTALS

* Spot gold was down 0.1% at $1,811.83 per ounce, as of 0128 GMT, after falling more than 1% on Tuesday. U.S. gold futures fell 0.2% to $1,816.30.

* The dollar index hit a three-month month high, making bullion less affordable for buyers holding other currencies.

* The Fed will likely need to raise interest rates more than expected in response to recent strong data and is prepared to move in larger steps if the “totality” of incoming information suggests tougher measures are needed to control inflation, Powell told U.S. lawmakers on Tuesday.

* Although gold is considered a hedge against inflation, interest rate hikes to control rising prices tend to decrease the appetite for zero-yield bullion.

* Traders of futures tied to the Fed’s policy rate have priced in a 50 basis-point rate hike at the U.S. central bank‘s March 21-22 policy meeting following Powell’s remarks. * Investors are awaiting the U.S. jobs report for February due on Friday.

* The head of Australia’s central bank said on Wednesday it was closer to pausing its aggressive cycle of rate increases as policy was now in restrictive territory, and suggested a halt could come as soon as April.

* Spot silver was down 0.2% at $20.01 per ounce, platinum firmed 0.4% to $933.43 and palladium fell 0.2% to $1,384.59.