Gold Nudges Higher as Traders Look for Clues on Rates and Dollar
Gold edged higher, with investors waiting for the next clue on the Federal Reserve’s path for cutting interest rates.
Bullion is trading about $37 an ounce short of Wednesday’s all-time high — a record triggered by the US central bank’s 25 basis-point rate cut. Prices then retreated after Fed Chair Jerome Powell’s comments on the monetary policy path were less dovish than expected, saying officials were in a “meeting-by-meeting situation” regarding any further easing.
Lower rates typically benefit gold, as it doesn’t pay yields. Powell’s stance also bolstered the dollar, which is a negative for the metal as it makes it more expensive to purchase in other currencies.
Gold is “settling into a consolidation band” after its rally earlier this month, said Ahmad Assiri, a strategist at Pepperstone Group Ltd. With prices near where they were a week ago, that suggests that “the market is finding a new footing after the run-up. Flows remain biased toward the buy side, though with less urgency to push through the recent ceiling near $3,700.”
Traders are still pricing in almost two more rate cuts this year, with the expectation of Fed monetary easing a major catalyst in bullion’s 39% surge this year. Prices have also been supported by haven demand due to concerns over geopolitical conflicts and the impact of US President Donald Trump’s tariffs on the global economy, along with increased central-bank purchases and holdings in exchange-traded funds.
Looking ahead, the administration’s attack on the Fed’s independence may further reinforce the rally. Governor Lisa Cook is in the middle of a legal battle with Trump, who sought to fire her on mortgage fraud allegations. The administration’s economic adviser, Stephen Miran, was fast-tracked into the Fed to fill a temporary vacancy. He was also the only one voting against Wednesday’s decision, preferring a half-point cut.
Gold rose 0.8% to 3,675.06 an ounce as of 11:23 a.m. in New York, making it slightly higher for the week.
The Bloomberg Dollar Spot Index edged higher. Silver and platinum rose, while palladium fell 1.2%.
Source: Bloomberg.com
