Investing.com - Gold futures edged lower in Europe trade on Wednesday, as investors looked ahead to testimony from Federal Reserve Chair Janet Yellen later in the day for further clarity on the pace of future interest rate hikes.
Yellen is scheduled to testify on the economy before the House Financial Services Committee at 15:00GMT, or 10:00AM ET, Wednesday. Her comments will be released at 8:30AM ET. On Thursday, Yellen will appear before the Senate Banking Committee.
The Fed chief is expected to defend the U.S. central bank's first rate hike in a decade last December and likely insist that further rises this year remain on track, albeit at a slower pace.
A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Gold for April delivery on the Comex division of the New York Mercantile Exchange sank $10.60, or 0.88%, to trade at $1,188.00 a troy ounce by 08:00GMT, or 3:00AM ET. On Tuesday, prices inched up 70 cents, or 0.06%.
Gold rallied to an eight-month high of $1,201.40 on Monday amid indications global economic and financial headwinds could make it tough for the Federal Reserve to raise interest rates as much as it would like this year.
Market participants have all but priced out any rate hikes this year amid signs of stress in the global financial system, while the Fed is indicating four more.
Gold prices are up almost 12% so far this year as investors seek safe havens in the face of mounting instability in other financial markets. The yellow metal is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
Japan’s Nikkei 225 lost 2.3% on Wednesday, while the U.S. dollar traded below the 115-level against the yen, as anxiety over slowing growth, weak oil prices and jitters over the soundness of the European banking sector spurred demand for the Japanese currency, another safe haven.