Gold steadied near a seven-week low on Tuesday as investors looked to Federal Reserve Chair Janet Yellen’s Senate testimony for signs of when the U.S. central bank could raise interest rates. Expectations the Fed will hike rates this year amid signals of a strengthening U.S. economy have curbed gold’s safe-haven appeal.
But investors are keen to see if Yellen will echo the minutes of the Fed’s January meeting, when policymakers expressed the view that raising interest rates too soon may pour cold water on the U.S. recovery. Spot gold was little changed at $1,201.10 an ounce by 0247 GMT. The metal on Monday hit its weakest since Jan. 5 at $1,191.01.
Gold has fallen more than 6 percent this month, nearly erasing January’s 8.4-percent gain, which was its biggest in three years. “With a healthy U.S. economy, that gives the impetus for the Fed to start normalising interest rates and this is a very bearish signal for gold,” said OCBC Bank analyst Barnabas Gan, who sees the metal at $1,000 by year-end.