PRECIOUS-Gold eases after Powell shuns chances of negative U.S. rates

(Updates prices, adds palladium milestone)
* Initial U.S. jobless claims data due at 1230 GMT
* Palladium gains after last session's 2.3% fall
* SPDR gold holdings hit fresh seven-year high
* For an interactive graphic tracking the global coronavirus
spread, open https://tmsnrt.rs/3aIRuz7 in an external browser

By Harshith Aranya
May 14 (Reuters) - Gold eased on Thursday as U.S. Federal
Reserve Chairman Jerome Powell downplayed the possibility of
negative interest rates, but his warning of an extended period
of weak economic growth capped the metal's losses.
Spot gold XAU= was down 0.1% to $1,714.20 per ounce by
0634 GMT, having jumped 0.8% in the previous session on Powell's
dour view on the recovery of an economy battered by the
coronavirus pandemic. U.S. gold futures GCv1 rose 0.4% to
$1,723.80.
"Powell's comments that he is not keen on negative interest
rates have put a damper on (gold's) rally," said Avtar Sandu, a
senior commodities manager at Phillip Futures.
However, Sandu said the overall speech was bullish for gold,
adding that: "Prices rallied after Powell said economies are not
doing well because of the virus and you can expect further
stimulus. He's expecting more from the fiscal side."
On Wednesday, Powell vowed to use the central bank's power
as needed, and called for additional fiscal spending to help the
virus-hit economy. All eyes are now on the weekly U.S. jobless claims data due
at 1230 GMT for more clues about the economic outlook.
Central banks and governments around the globe have
unleashed unprecedented fiscal and monetary support to shield
their economies from the pandemic. Gold tends to benefit from widespread stimulus measures as
it is often seen as a hedge against inflation and currency
debasement.
Underscoring the economic impact of the epidemic, U.S.
producer prices fell in April by the most since 2009, leading to
the largest annual decline in nearly 4-1/2 years. "Low inflation is ostensibly gold-bearish, but deflation may
prompt a higher degree of monetary accommodation, which is
gold-positive, but Powell did throw ice water on negative
rates," said Stephen Innes, chief market strategist at financial
services firm AxiCorp.
Lower interest rates reduce the opportunity cost of holding
non-yielding bullion.
The virus that causes COVID-19 could become endemic like
HIV, the World Health Organization said, warning against any
attempt to predict how long it would keep circulating and
calling for a "massive effort" to counter it. SPDR Gold Trust GLD holdings, the world's largest
gold-backed exchange-traded fund, rose 0.78% to a fresh
seven-year high of 1,092.14 tonnes on Wednesday. GOL/ETF
Palladium XPD= climbed 0.4% to $1,825.81 an ounce, after
having fallen 2.3% on Wednesday.
Platinum XPT= gained 1.2% to $765.96 per ounce, while
silver XAG= fell 0.8% to $15.52.

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For an interactive graphic tracking the global spread, open link
in an external browser https://tmsnrt.rs/3aIRuz7
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