* Powell says economy still needs Fed support
* Powell testimony to resume at 1500 GMT
* U.S. 10-year yields hover near one-year high (Updates prices)
By K. Sathya Narayanan
Feb 24 (Reuters) – Gold edged higher on Wednesday on a weaker dollar but the metal held in a tight range as investors digested monetary policy cues from Federal Reserve Chair Jerome Powell.
Spot gold was up 0.2% at $1,807.70 per ounce by 1235 GMT. U.S. GCv1 rose 0.2% to $1,808.90.
Powell told the U.S. Senate Banking Committee that monetary policy still needed to be accommodative with economic recovery “uneven and far from complete”. His testimony continues later in the day. also mentioned that the increase in bond yields was due to higher inflation and growth expectations. did say that the recent run-up in bond yields was a statement of confidence in the U.S. economy, and that … could mean the Fed is willing to allow rates to run even higher, which will create a challenge for gold,” Saxo Bank analyst Ole Hansen said.
“For gold to recover again, it needs to be the inflation focus. The focus has faded and has been substituted by the current nervousness about the yields going higher.”
U.S. Treasury yields hovered close to a one-year high, while the dollar eased 0.1% against key rivals, holding near a six-week low it touched in the previous session. US/ USD/
Rising yields tend to hurt bullion’s appeal as an inflation hedge since they increase the opportunity cost of holding the metal.
But Powell’s remarks also indicated that “the stimulus trade is unlikely to go away anytime in the next six months”, Michael Langford, director at corporate advisory AirGuide said, adding the potential impact of inflation as a result of stimulus measures will be a key upward driver for gold.
rose 0.6% to $27.78 an ounce. Platinum climbed 2.5% to $1,267.38, while palladium added 0.9% to $2,372.27.
The market expects the price difference between gold and platinum to narrow, amid an outlook for higher demand for auto-catalysts due to new green technologies, Saxo Bank’s Hansen said.
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