Fed Confused, Russia Heats Up, Gold Becomes King
Gold prices held just below their record after a three-day rally, as investors digested comments from Fed officials and escalating tensions over Russia. Spot gold traded in the range of $3,760–$3,761/oz, about $30 below Tuesday's peak. Jerome Powell assessed risks to the labor market and inflation without signaling further cuts in October, while Governor Michelle Bowman left open the possibility of faster easing if the job market weakens.
Gold and silver's strong performance this year has been driven by a combination of factors: the Fed's interest rate cut last week, persistently high central bank demand, and news of China's plans to become a custodian of other countries' gold reserves. Fund flows into gold-backed ETFs have also surged, hitting a three-year high on Friday; year-to-date, gold ETF holdings (excluding May) have continued to grow and are approaching 400 tonnes.
On the geopolitical front, US President Donald Trump said NATO countries should shoot down Russian aircraft violating their airspace, while assessing the growing opportunity for Ukraine to retake its territory. These statements add to the safe-haven case for gold amid global uncertainty.
Looking ahead, focus is on Friday's US PCE release—the Fed's favorite inflation measure. If core inflation slows, the case for interest rate cuts strengthens, which is typically positive for non-yielding gold. At the time of writing in Singapore, gold was steady at $3,760.70/oz, the dollar index flat; silver held steady after breaking through $44/oz, while platinum was flat and palladium trended lower. (ads)
Source: Bloomberg
