Gold on track for weekly gain as Fed reinforces rate-cut hopes


Gold futures were little changed Friday, on track for a weekly gain after Federal Reserve Chairman Jerome Powell did nothing to dispel expectations for a rate cut later this month and the U.S. dollar came under renewed pressure.

Gold for August delivery on Comex












GCQ19, -0.04%










 was off 60 cents, or less than 0.1%, at $1,406.10 an ounce, and was on track for a weekly rise of 0.4%. September silver












SIU19, -0.40%










 was off 6.1 cents, or 0.4%, at $15.085 an ounce, but on track for a 0.6% weekly rise.

Gold gave up a modest early gain after data showed U.S. producer prices rose 0.1% in June, defying expectations for a 0.1% fall. Excluding food, energy and trade margins, core PPI was flat after two straight months of 0.4% gains.

“The combination of Fed Chair Powell’s dovish testimony this week, solidified cut expectations, [U.S. dollar] moves, equity market records, and global uncertainty have, to put it plainly, solidified upside risk” for gold, wrote Christopher Louney, analyst at RBC Capital Markets, in a note.

Powell testified before Congress Wednesday and Thursday. The Fed chief offered no pushback against expectations that policy makers will move to cut rates when they meet July 30-31, with investors penciling in scope for further cuts later in the year.

The U.S. dollar, meanwhile, has seen renewed pressure this week, with the ICE U.S. Dollar












DXY, -0.01%










 , a measure of the currency against a basket of six major rivals, off 0.3% this week. A weaker dollar can be a positive for commodities priced in the unit, as it makes them less expensive to users of other currencies.

“Of course, it was Powell not using this week as an opportunity to talk down rate cut expectations, and instead citing that ‘the uncertainties around global growth and trade continue to weigh on t he outlook’ which has solidified the price risks for gold, and our economists now expect the Fed to cut by 25 basis-point in July and have penciled in another 25 [basis-point] cut in September,” Louney said.

The analyst warned, however, that the rally comes with “vulnerabilities,” including the potential for trade tensions to subside, which could erode the metal’s haven appeal.

In other metals trade, October platinum












PLV19, -1.13%










 fell $8.10, or 1%, to $822.80 an ounce, while September palladium












PAU19, -0.87%










 was off $6.10, or 0.4%, to $1,553 an ounce.

September copper












HGU19, -0.41%










 rose 0.1 cent to $2.6885 a pound.



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