Warsh's Comments Lift Gold, US Dollar Begins to Weaken
Gold prices continued their rebound on Thursday (July 2nd) after comments from US Federal Reserve Chairman Kevin Warsh dampened speculation that the central bank would raise interest rates this year to control inflation. Gold rose 1.2% to trade around US$4,080 per ounce after closing up 0.6% in the previous session.
Warsh's comments at the European Central Bank forum in Portugal were considered less aggressive than the market had feared. The statement helped ease concerns about the Fed's next move, especially after the Iran war had pushed up energy prices and inflation indicators. Higher interest rates typically put pressure on gold because the precious metal does not provide a yield.
Nevertheless, Warsh reiterated the Fed's commitment to maintaining price stability and bringing inflation back to its 2% target. Pepperstone Group analyst Ahmad Assiri believes this sentiment remains positive for gold, even though the US dollar remains relatively high and Treasury yields have recovered most of their previous losses.
Recent US data shows a mixed economic picture. Manufacturing activity grew for the sixth consecutive month in June, but at a slower pace. Meanwhile, private sector job creation remained solid, capping the best three-month period for hiring in more than a year.
At 2:49 p.m. Singapore time, spot gold rose 1% to US$4,069.44 per ounce. Silver gained 1.4% to US$59.96 per ounce, while platinum and palladium also moved higher. The Bloomberg Dollar Spot Index weakened 0.2%, while the market now awaits US payrolls data on Thursday for further clues on the Fed's policy direction. (asd)*
Source: Newsmaker.id
