Gold steady as traders await Powell testimony for rate cues

Gold prices flitted in a tight range on Tuesday, as market participants maintained a cautious stance and awaited further direction from the Capitol Hill testimony by U.S. Federal Reserve chair Jerome Powell due this week.

FUNDAMENTALS

* Spot gold held its ground at $1,950.89 per ounce by 0027 GMT after dipping in holiday-thinned trade on Monday. U.S. gold futures were down 0.4% at $1,962.60.

* Markets now await Powell’s congressional testimonies due on Wednesday and Thursday for cues on future rates, following a ‘hawkish pause’ on monetary policy tightening.

* Gold is considered a hedge against inflation, but interest rate hikes raise the opportunity cost of holding non-yielding bullion.

* Traders are now pricing in an about 74% chance of Fed rate hike in July, according to the CME Fedwatch tool.
* China is widely expected to cut key lending benchmarks on Tuesday in the first such easing in 10 months, a Reuters survey showed, as authorities seek to shore up a slowing recovery in the world’s second-largest economy. * Meanwhile, consumer confidence in New Zealand improved in the second quarter but households remain deeply pessimistic about the economic landscape, a survey showed on Tuesday.

* Additionally, the European Central Bank should raise interest rates again in July as inflation risks are skewed towards higher outcomes, Slovakia’s central bank chief said on Monday, while the Bank of England is expected to raise rates by another 25 basis points on Thursday.

* Spot silver was up 0.2% at $23.9945 per ounce, palladium rose 0.3 to $1,410.36, while platinum fell 0.2% to $973.63.