Spot gold rose 1.2% to $2,512.63 an ounce by 1:44 p.m. ET (1744 GMT), but was off the record high of $2,531.60 hit on Tuesday. U.S. gold futures closed up 1.2% at $2,546.30.
Powell said that “the time has come” for US central bank to cut interest rates and that inflation was approaching the Fed’s 2% target, offering explicit support for an imminent policy easing.
The dollar index fell 0.8% against its rivals, while benchmark 10-year U.S. bond yields also declined following Powell’s speech, making gold more attractive to holders of other currencies. [USD/][US/]
“Asset markets are reacting well, at least initially, to Powell’s general, if somewhat open-minded, comment that it’s time for policy to tighten,” said Tai Wong, an independent metals trader based in New York. “Gold will continue to rise ahead of the September Fed meeting and the updated dot plot that will indicate how many cuts are likely this year.” US Interest Rates “It also tends to increase the relative attractiveness of zero-yield bullion. Gold could be over-positioned at the long end and we could see massive selling and some profit-taking,” said Bart Melek, head of commodity strategies at TD Securities.
“But in the long run, gold should perform well as the Fed is picking its game well and trying to make sure employment doesn’t weaken further and it isn’t worried about inflation.”
Traders expect a 59.5% chance of a 25 basis point cut in September, while 40.5% expect a deeper 50 basis point reduction.
Silver rose 2.9% to $29.83 an ounce and is up nearly 2.7% for the week.
India silver imports are on track to nearly double this year due to rising demand from solar panel and electronics makers, major importers said.
Platinum Gold rose 1.8% to $961.01 and palladium rose 2.6% to $956.69.
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