Gold records its lowest level in a week after Fed

Gold prices fell to a one-week low on Wednesday after Federal Reserve Chairman Jerome Powell said that it would likely take a higher-than-expected interest rate hike to curb inflationary pressures.

Gold fell 0.1 percent in spot transactions to $ 1812.44 an ounce by 0634 GMT. US gold futures also fell 0.2 percent to $1,816.50.

Powell, on the first day of his two-day semi-annual congressional testimony, said the Federal Reserve likely needed to raise interest rates more than expected in the face of recent strong data, and that he was prepared to take bigger steps if the “total” of the information received indicated The need for tougher measures to curb inflation.

In the wake of Powell’s comments on Tuesday, gold prices fell 1.9 percent, or more than $30, to $1,812.55.

Higher interest rates usually reduce the attractiveness of gold because they increase the opportunity cost of holding the non-yielding asset.

Markets now expect a 50 basis point rate hike at the Fed’s monetary policy meeting on March 21-22.

The dollar index rose to its highest level in three months, making the precious metal more expensive for buyers who hold other currencies.

With regard to other precious metals, spot silver fell 0.1 percent to $20.03 an ounce, while platinum rose 0.8 percent to $936.72 and palladium 0.3 percent to $1391.40.