COMEX gold futures fell slightly in volatility on Tuesday as the dollar recovered the ground lost by Federal Reserve Chairman Colin Powell after his speech. Powell said the economic recovery was "uneven and far from complete".
April gold futures, the most actively traded, closed down $2.50, or 0.1%, at $1805.9 an ounce at 13:30 new York time.
Monthly silver in the most actively traded COMEX3 fell 39.7 cents, or 1.41%, to settle at $27.688 an ounce.
Platinum fell $42.60, or 3.32%, to settle at $1239.7 an ounce in April.
Palladium fell $57, or 2.38%, to settle at $2335.1 an ounce in March.
Among COMEX's other metals, the most actively traded three-month copper contract closed up 3.75 cents, or 0.91%, at $4.1785 a pound.
Mr Powell said it would take "some time" for the Fed to consider changing its policy to help the economy return to full employment and that he "does not expect inflation to rise to disturbing levels".
Powell reiterated that he will keep interest rates close to zero until full employment and inflation rise to 2%, and are expected to moderately exceed 2% for some time.
Mr Powell said that in hard-hit industries, inflation was still "particularly weak", it was still below its long-term target of 2 per cent, and the Fed promised to use all its tools; it would not tighten monetary policy just to deal with a strong labour market.
"Powell was a little volatile when he testified in the Senate, but he didn't say anything that would cause market volatility," said Craig Erlam, an analyst at OANDA.
"despite the market volatility, we have not seen any significant directional movement in bond yields or the dollar exchange rate, which is why gold prices have only fallen slightly in response to a slight rise in the dollar."
The dollar index rallied 0.2%, off a nearly six-week low, making gold more expensive for holders of other currencies.
Kyle Rodda, an analyst at IG Market, said gold may struggle to reverse the trend and rise sharply, "unless inflation expectations rise substantially, or the Fed talks about controlling the yield curve."
Higher yields will affect the attractiveness of gold as a safe haven as it increases the opportunity cost of holding gold.
Gold prices rose on Monday as the prospect of rising inflation raised concerns about stock valuations, prompting investors to turn to safe-haven metals.
(Commerzbank), a German commercial bank, recently lowered its gold price forecast, but it is still optimistic that the gold price will break through the $2000 / oz mark.
The investment bank lowered its forecast for gold prices this year to around $2000 an ounce in the fourth quarter, down sharply from the previous $2300.
Platinum weakened sharply as investors worried that the prospect of economic recovery had been digested by the prices of some stocks and metals.
The failure of platinum to rise back to $1300 led to profit-taking as investors worried that the prospect of an economic recovery had been digested by the prices of some stocks and metals, and the decline was driven by worsening sentiment. It is worth noting that platinum and palladium sometimes behave like industrial metals, given their wide range of industrial uses.
