Gold range-bound as markets position for Powell's testimony

Gold traded in a narrow range on Wednesday as traders refrained from making big bets ahead of Federal Reserve Chairman Jerome Powell’s congressional testimony, which could offer further insight into the central bank’s interest-rate hike plan.

FUNDAMENTALS

* Spot gold was almost unchanged at $1,936.99 per ounce by 0028 GMT. U.S. gold futures too were little changed at $1,948.20.

* Powell’s congressional testimonies due on Wednesday and Thursday will be scanned for U.S. interest rate outlook.

* Two Federal Reserve policymakers and an economist nominated to join them on the Fed’s Washington-based board on Tuesday said their focus is on bringing down too-high inflation so that the U.S. economy can get back to sustainable growth.

* The Senate Banking Committee also released prepared remarks from Fed Board nominee Adriana Kugler, who said returning inflation to the central bank’s 2% target is key to setting a strong foundation for the U.S. economy.

* Gold is considered a hedge against inflation, but interest-rate hikes raise the opportunity cost of holding non-yielding bullion.

* Traders are now pricing in an about 78 per cent chance of a Fed rate hike in July, according to the CME Fedwatch tool.

* U.S. Treasury yields fell on Tuesday, in line with declines in Europe and the UK, as investors priced in market expectations that the Fed is near the end of its rate-hiking cycle, with some sectors of the economy having shown signs of moderation.

* Meanwhile, pressure is mounting on China’s cash-strapped local governments as authorities move to shut a private funding route for their financing arms, according to planned new rules and people familiar with their aims, raising credit risks and default worries.

* Spot silver ticked down 0.1% to $23.1517 per ounce, platinum fell 0.3% to $959.76, while palladium rose 0.4% to $1,385.18.