Gold gains 1% as Powell comments hint at September rate cut
"The time has come" to cut interest rates - Powell
Dollar down 0.6% against its rivals
Adds comments and updates prices as of 1611 GMT
By Anushree Ashish Mukherjee
Aug 23 (Reuters) -Gold prices gained 1% on Friday as the dollar and Treasury yields retreated following Federal Reserve Chair Jerome Powell comments signalling an interest rate cut in September.
Spot gold XAU= rose 1% to $2,508.25 per ounce by 12:11 p.m. ET (1611 GMT), but was off a record high of $2,531.60 hit on Tuesday. U.S. gold futures GCcv1 gained 1.1% to $2,544.40.
Powell said "the time has come" for the U.S. central bank to cut interest rates and inflation was in reach of the Fed's 2% target, offering an explicit endorsement of an imminent policy easing.
The dollar index =USD fell 0.6% against its rivals, while benchmark U.S. 10-year yields US10YT=RR also declined following Powell's speech, making gold more attractive for other currency holders. USD/US/
"Asset markets are reacting well, at least initially, to Powell's general, but somewhat open-ended comment that it's time for policy to adjust," said Tai Wong, a New York-based independent metals trader.
"Gold will continue to grind higher ahead of the September Fed meeting and the updated dot plot which will indicate how many likely cuts this year."
Lower U.S. interest rates also generally increase the relative appeal of zero-yield bullion.
Gold might be over-positioned to the long end and we could see selloffs and some profit-taking, said Bart Melek, head of commodity strategies at TD Securities.
"But longer term, gold should do well since the Fed is very much picking their game and trying to make sure employment doesn't weaken anymore and is not worried about inflation."
Traders are expecting a 65.5% chance of a 25-basis point cut in September, while 34.5% expect a deeper 50-bps reduction. FEDWATCH
Silver XAG= rose 2.4% to $29.67 per ounce and was up nearly 2.3% for the week.
India's silver imports are on course to nearly double this year due to rising demand from solar panel and electronics makers, leading importers said.
Platinum XPT= gained 1.6% to $958.40 and palladium XPD= was up 1.7% at $948.41.
Spot gold price in USD per oz https://reut.rs/4fQq0ZX
Reporting by Anushree Mukherjee and Brijesh Patel in Bengaluru; Editing by Sharon Singleton, Vijay Kishore and Shreya Biswas
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
