BENGALURU - Gold prices on Wednesday held steady near a one-year low hit in the previous session, as the dollar firmed after Federal Reserve Chairman Jerome Powell's U.S. economic outlook reinforced views the central bank is on track to steadily hike interest rates.
Spot gold was largely unchanged at $1,227.78 an ounce at 0315 GMT. On Tuesday, it fell 1 percent and hit its lowest since last July at $1,225.58 an ounce.
U.S. gold futures for August delivery were little changed at $1,227.80 an ounce.
The stronger dollar following Powell's comments was weighing on gold prices, said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.
"People are selling emerging markets, commodities and buying the dollar as it seems to be the most stable investment. As long as this trend continues ... it's a pretty tough situation for commodities," Ikemizu said.
The dollar was broadly higher on Wednesday, hitting a six-month peak against the yen, after Powell gave an upbeat outlook for the U.S. economy and reinforced views that the Fed was on track to gradually raise rates.
Meanwhile, another central banker on Tuesday said that with the U.S. economy firing on all cylinders, the Fed should ease away from monetary policy accommodation and move interest rates up far enough to prevent unwanted inflation but not so fast that a recession ensues.
Higher interest rates tend to boost the dollar and push up bond yields, making greenback-denominated gold more expensive for holders of other currencies and denting its appeal.
"With the USD on a solid footing, gold prices should stay pressured lower for the foreseeable future as gold has wholly lost its glittering appeal in this enduringly bullish equity and USD environment," said Stephen Innes, APAC trading head at OANDA.
However, Reuters technicals analyst Wang Tao said spot gold has found support at $1,226 per ounce and may hover above this level or bounce towards resistance at $1,237.
Among other precious metals, silver was up 0.4 percent at $15.60 an ounce. It fell to its lowest since July 2017 at $15.51 in the previous session.
Platinum was 0.3-percent lower at $810.25 an ounce, while palladium rose 0.3 percent to $913.80 per ounce.