Gold eases back from multi-week high as new Fed chair & US tax in focus

The price of gold edged lower on Tuesday but held close to the six-week high hit in the previous session. Investors are anticipating the confirmation hearing of US Federal Reserve chair nominee Jerome Powell and a possible Senate vote on US tax reforms.

Spot gold was down 0.13 percent at $1,296.20 per ounce, as of 13:56 GMT. In the previous session, the precious metal touched a high of $1,299.13 an ounce, its highest price since October 16. US gold futures for December delivery were also down $1.60 an ounce at $1,292.80.

Powell defended the Fed's use of its crisis-fighting powers, suggesting a broad extension of current Chair Janet Yellen's position toward monetary policy, according to the prepared remarks for the hearing, published on Monday.

“His decisions on rates are suggested to be almost indistinguishable from those of his predecessor, but I would not be surprised if in the next few months we see him taking a dovish path,” ActivTrades chief analyst Carlo Alberto de Casa told Reuters.

The analyst expects the new chair not to raise rates too much, but to monitor US inflation and the job market instead.

Gold bullion is commonly highly sensitive to rising rates, which boosts the opportunity cost of holding non-yielding assets, such as gold while lifting the greenback, in which it is priced.

The dollar index was 0.2 percent higher against a currency basket. “The dollar was under pressure yesterday, but we've seen some recovery dollar-wise, and that has been weighing on gold. We have Yellen and the hearing of Powell, so traders are a bit cautious,” ABN Amro analyst Georgette Boele said, as quoted by the media.