Gold price was locked in a narrow range on Wednesday as investors waited for Federal Reserve Chair Janet Yellen’s congressional testimony for more clues on the timing of a U.S. interest rate increase this year.
Ahead of Yellen’s testimony, data showed economic growth in top gold consumer China held steady at 7 percent in the second quarter, above market expectations of 6.9 percent.
Yellen said last week that the Fed was on course to lift rates at some point this year, but an unexpected drop in U.S. retail sales in June renewed concerns the world’s top economy may be slowing again.
“Markets will want to know whether this year’s expected rate hike will be followed by a succession of other increases and how quickly these set in,” INTL FCStone analyst Edward Meir said in a note.
Spot gold was little changed at $1,154.67 an ounce by 0233 GMT, after two days of modest losses.
A looming U.S. rate hike boosts the dollar, putting dollar-priced assets such as gold out of favour as they become more costly for buyers holding other currencies.
U.S. gold for August delivery was also steady at $1,154.30 an ounce. Spot palladium climbed 1.2 percent to $658 per ounce, its third gain in four sessions.
U.S. retail sales slipped 0.3 percent last month, the weakest reading since February, after May’s downwardly revised 1.0 percent increase.
The data came ahead of Yellen’s semiannual testimony on monetary policy to the U.S. House of Representatives later on Wednesday at which she is likely to reiterate that it will be appropriate to raise interest rates later this year, a point she again made in a speech last week.
Asian stocks edged higher after the raft of upbeat Chinese data. Apart from gross domestic product, industrial output also beat market estimates, rising 6.8 percent in June, well ahead of the forecast 6.0 percent clip.
But Phillip Futures analyst Howie Lee said the recent stock market crash is “expected to have hidden but deep impacts on the economy, and China will face a huge test to manage another 7 percent growth in the third quarter”.