BENGALURU, July 11 (Reuters): Gold prices rose to a one-week high on Thursday, extending gains from the previous session after US Federal Reserve Chairman Jerome Powell's dovish remarks bolstered expectations of an interest rate cut this month.
Spot gold rose 0.3 per cent to $1,422.67 per ounce at 0948 GMT, after earlier hitting its highest since July 3 at $1,426. The metal gained 1.5 per cent in the previous session.
US gold futures jumped 0.9 per cent to $1,424.70 an ounce.
"Powell's testimony last night is giving gold a significant lift, with the market taking an indication that there is going to be a rate cut of 25 basis points coming soon," said Ross Norman, chief executive at bullion dealer Sharps Pixley.
In his testimony to Congress, Powell pointed to broad global weakness clouding the US economic outlook amid uncertainty on the fallout from the Trump administration's trade conflict with China and other nations.
Echoing the dovish sentiment, the minutes from Fed's June policy meeting showed many policymakers thought more stimulus would be needed soon, reinforcing the case for a US interest rate cut in July.
The US Treasury yield curve steepened and the dollar came off three-week highs following the congressional testimony, further supporting bullion.
"The bonds market has been indicating for a while now that the global economic backdrop is darkening. The mood in gold is pretty upbeat on the basis of that," Norman added.
"During the bull run from $1,280, gold has had relatively few pauses and dips have been pretty shallow, indicating that underlying sentiment remains very, very positive."
Gold rallied to a six-year peak of $1,438.63 an ounce last month, largely on the back of expectations of rate cuts by key central banks amid concerns over the global economy.
"A break above $1,438 may lead to further buying orders with $1,500 being the next level traders looking to target," Hussein Sayed, chief market strategist at FXTM, wrote in a note.
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