Powell said the Fed is not trying to engineer a recession to stop inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn.
The dollar index, which compares the greenback against a basket of six major currencies, stayed almost flat at the 104.12 level. Gold shares an inverse relationship with the dollar.
Gold futures for August delivery fell 0.22 per cent to Rs 50,791 per 10 grams. Silver futures for July delivery declined 0.67 per cent to Rs 60,243 per KG in early trade.
In his testimony, Powell acknowledged that a recession was “certainly a possibility” and events in the last few months around the world had made it more difficult to reduce inflation without causing one.
Analysts said the safe-haven demand may keep a cap on the downside in gold prices.
“Geopolitical uncertainty and rising concerns of an economic slowdown are likely to support the precious metals. Gold has support at $1,828-1,816, while resistance is at $1,852-1,861. Silver has support at $21.10-20.85 and resistance at $21.65-21.95,” said Rahul Kalantri, VP Commodities, Mehta Equities.
In rupee terms, Kalantri said, gold has support at Rs 50,540–50,210 and resistance at Rs 50,980–51,240, adding that silver has support at Rs 60,120-59,550 and resistance at Rs61,380–61,710.
A Reuters poll showed the Fed will deliver another 75-basis-point interest rate hike in July, followed by a half-percentage-point rise in September, and won’t scale back to quarter-percentage-point moves until November at the earliest.
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