Gold settles above $1,400 as investors await interest-rate hints from Fed Chair Powell

By Myra P. Saefong and William Watts / July 09, 2019 / www.marketwatch.com / Article Link

Gold futures rose Tuesday to top $1,400 an ounce, as investors awaited Federal Reserve Chairman Jerome Powell's testimony to Congress which could offer clues about the prospects for interest rate cuts in coming months.

Powell delivered remarks on recent stress tests for banks at a conference in Boston Tuesday without commenting on monetary policy, but the week's main event was expected to be his two days of testimony on the economic outlook before Congress beginning Wednesday. That's the same day the Fed will also release the minutes from the central bank's June meeting.

Powell's guidance on interest rate cuts "will set the trend in gold, silver and [the] U.S. dollar Index for the rest of the month," said Chintan Karnani, chief market analyst at Insignia Consultants. If Powell adopts a "middle of road path" and leaves interest rate cuts dependent on economic data, "then gold and silver will sell off first and then rise."

Gold for August delivery on Comex GCQ19, +0.96% rose 50 cents, or 0.04%, to settle at $1,400.50 an ounce after trading as low as $1,387.50. September silver SIU19, +0.45% tacked o 9.7 cents, or 0.6%, at $15.147 an ounce.

"Gold traders are undecided about keeping prices sustainably above $1,400, even as bullion endures its steepest moves since 2016," said Han Tan, market analyst at FXTM, in a note. "Safe haven assets are expected to hold less appeal should the Federal Reserve step back from its easing stance."

Read: Could the Fed surprise the stock market by skipping a July rate cut? It's not out of the question

Investors late last week scaled back expectations for the scope of interest-rate cuts by the Fed after stronger-than-expected monthly jobs data, but continue to see a quarter-point rate reduction at the end of this month as a virtual certainty.

In other metals trade, October platinum PLV19, +0.00% fell $5.30, or 0.7%, to $815.10 an ounce, while September palladium PAU19, +0.23% was off $18.30, or 1.2%, to $1,539.90 an ounce.

July copper HGN19, +2.42% lost 3.4 cents, or 1.3%, at $2.625 a pound.

Among exchange-traded funds, SPDR Gold Shares GLD, +1.58% added 0.6% in Tuesday dealings.

In June, assets under management among gold-backed exchange-traded funds saw their biggest monthly percentage climb since 2012, as prices for the yellow metal touched their highest levels in six years, according to a report from the World Gold Council released Tuesday.

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