By Ashitha Shivaprasad
March 6 (Reuters) – Gold prices fell on Monday after hitting a 2.5-week high earlier in the session, as traders awaited testimony from U.S. Federal Reserve Chairman Jerome Powell this week , looking for clues about future rate hikes.
* Spot gold was down 0.2% at $1,851.52 an ounce at 09:30 GMT, after hitting its highest level since February 15 at $1,858.19. US gold futures rose 0.2% to $1,858.90.
* All eyes are on Powell’s testimony before Congress on Tuesday and Wednesday, followed by the February jobs report to be released on Friday.
* “Right now gold is on hold,” said UBS analyst Giovanni Staunovo. “There is unlikely to be a change in scenario from Powell, reiterating the need for further interest rate hikes to control inflation.”
* Although gold is considered a hedge against inflation, rising rates tend to dampen the appetite for bullion, which does not earn interest.
* Friday’s data showed the U.S. services sector grew at a healthy pace in February, suggesting the economy continued to expand in the first quarter.
* On Saturday, San Francisco Federal Reserve Chair Mary Daly said that if the data continues to be better than expected, interest rates will have to rise and stay high for longer.
* China, the biggest consumer of gold, on Sunday set a modest economic growth target for this year of around 5% at the start of the annual session of its National People’s Congress.
* Among other precious metals, spot silver was down 0.4% at $21.15 an ounce, platinum was down 1% at $967.45 and palladium was down 2.1% at $1,422.80.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing in Spanish by Ricardo Figueroa)