Gold prices were roughly unchanged on Wednesday but looked set to post a monthly loss for the first time in three months amid improving sentiment on the pace of rate hikes.
Gold futures for April delivery on the Comex division of the New York Mercantile Exchange rose by $1.70, or 0.13%, to $1,320.30 a troy ounce.
Despite U.S. bond yields dropping on subdued economic data, gold prices struggled to mount a meaningful advance as positive sentiment on the yellow metal remained somewhat challenged by growing investor expectations for a faster pace of U.S. rate hikes.
The upbeat investor outlook on rate hikes come as recent data pointed to an improving inflationary environment. This was echoed by Fed chair Jerome Powell Tuesday, raising the prospect of four rate hikes in 2018. With current interest rates at 1.25% to 1.50%, four quarter-point rate hikes would take the Fed’s benchmark rate to 2.25% to 2.50% by December-end.
Stifel chief economist, Lindsey Piegza said Powell’s stance wasn’t definitive but “seemingly convinced at least some market participants to read a more hawkish tilt in his remarks” igniting “fears of an overly aggressive Fed reignited selling.”
Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding non-yielding assets such as bullion.
In other precious metal trade, silver futures rose 0.36% to $16.41 a troy ounce, while platinum futures gained 0.29% to $987.50 an ounce.
Copper fell 1.65% to $3.134, while natural gas was flat $2.68 as traders awaited the Energy Information Agency’s weekly natural gas storage data due Thursday.