Gold prices resumed its fall for a third straight session on Thursday as firmness in the dollar lowered demand on the previous metal, ahead of Fed head Jerome Powell’s second Congressional testimony later in the day.
The yellow metal is currently trading at $1313.96 an ounce after setting a low at $1312.50, where it could find the next support near $1306.
In February, gold reported its first monthly decline in four months, posting a 2 percent tumble last month, while currently hovering near three-week lows.
The U.S. dollar index, which tracks the green currency’s movements versus a basket of major currencies, retreated to 90.56 after touching a six-week high of 90.68.
Since relapsing to a three-year bottom of 88.14 on February 16, the dollar has managed to edge up more than 2.8 percent.
It seems that investors have finally realized the clear divergence in monetary policy between the Fed and other major central banks.
While there has been progress in economic data and some hints of monetary tightening, still there is a huge gap between the Fed and the ECB and BOJ for instance.
Recent comments from policymakers of the ECB and BOJ have pointed to the need to hold stimulus for a while to bolster inflation.
In his first Congressional testimony on Tuesday, the new Chair signaled optimism about the economy and the improvement in the latest economic data.
His remarks raised speculations the Fed may ramp up the pace of interest rate hikes this year to four instead of three.
Eyes will carefully watch Powell’s comments during his second Congressional testimony later in the day, looking for clues about the borrowing cost increases trajectory.
A quicker pace of rate hikes by the Fed should put extra pressure on the
precious metal that does not grant its holders any yield.