Gold’s Record Rally Steady as Traders Assess Powell Speech
Gold fell for a second day, retreating from a record high, as the U.S. central bank signaled it was in no rush to deliver more interest rate cuts.
Bullion fell below $2,888 an ounce, after peaking above $2,942 on Tuesday, before ending lower. Federal Reserve Chairman Jerome Powell said officials would be patient before easing monetary policy further. The yield on the benchmark 10-year U.S. Treasury note rose, a drag on bullion because it pays no interest.
Gold has surged higher this year, hitting back-to-back records and potentially testing $3,000 an ounce. The surge has been fueled by rising demand for the safe-haven asset as U.S. President Donald Trump has launched a series of aggressive moves on trade, including planned levies on steel and aluminum imports. Traders are trying to get a sense of the potential implications for the U.S. economy and monetary policy if the White House’s stance on trade and immigration reignites inflation and hurts growth.
During his testimony on Tuesday, Powell said it would be unwise to speculate on tariff policy. Gold’s recent rally has been accompanied by inflows into bullion-backed exchange-traded funds. Global holdings have risen for six of the past seven weeks, hitting the highest since November, according to Bloomberg calculations. Banks have predicted that the $3,000-an-ounce challenge is possible. Among them, Citigroup Inc. said last week that it expects gold to reach that level within three months, with geopolitical tensions and trade wars boosting demand.
Investors will also be focused on a key U.S. inflation reading later Wednesday. The Bureau of Labor Statistics’ consumer price index excluding food and energy rose 0.3% in January for the fifth time in six months, supporting the Fed’s stance to keep interest rates on hold for now.
Spot gold fell 0.4% to $2,887.76 an ounce as of 11:43 a.m. in Singapore. The Bloomberg Dollar Spot Index rose 0.1%. Silver was flat, while platinum and palladium fell.
Source: Bloomberg
