Gold prices gave up earlier gains on Thursday to settle lower, pulling back from their highest level in a week, even as remarks by Federal Reserve Chairman Jerome Powell were seen signaling a rate cut remains likely at the end of the month.
"Feels like a classic buy the rumor and sell the news cycle playing out," said Jeff Wright, executive vice president of GoldMining Inc., when asked about the price turn lower Wednesday afternoon.
The Federal Open Market Committee is "looking to lower [interest] rates, but gradually not crash the U.S. dollar in the process," he said. "I am sensing a little profit-taking, but gold [is] still holding safely above $1,400."
Read: Fed minutes of June meeting bolster Powell's signal of imminent interest-rate cut
Gold for August delivery on Comex GCQ19, +0.39% fell $5.80, or 0.4%, to settle at $1,406.70 an ounce. Prices settled at $1,412.50 on Wednesday, the highest for a most-active contract since July 3, when they settled at $1,420.90-their highest since May 2013. September silver SIU19, +0.09% on Thursday declined by 8 cents, or 0.5%, to $15.146 an ounce.
In testimony to Congress Thursday Powell "stated the Fed now believes the neutral interest rate and the structural level of unemployment are both lower than previously supposed," said Ryan Giannotto, director of research at GraniteShares.
"Importantly, Powell explicitly carried this line of thought to its logic conclusion, that rates can be maintained at lower levels before being considered 'accommodative'", he said. "This outlook well positions gold as an asset class, pointing to the potential for more dovish monetary policy over a sustained time period."
"In this scenario, not only would gold benefit from a weaker dollar, all else equal, but also from a lower carrying cost as well," said Giannotto.
In prepared remarks Wednesday, Powell said the economy hasn't improved since June and the central bank would act as needed to support demand.
Powell's dovish tone sent the U.S. dollar lower Wednesday, but it traded mostly flat in Thursday dealings as gold futures settled. The ICE U.S. Dollar Index DXY, -0.34% a measure of the currency against a basket of six major rivals, was at 97.122, trading 0.2% lower so far this week. A weaker dollar can be a positive to commodities priced in the greenback as it makes them less expensive to users of other currencies.
See: Fed's Powell says trade worries restraining the economy, hints at interest-rate cuts soon
Among economic data Thursday, the U.S. government reported that the consumer-price index rose 0.1% in June, but consumer inflation was largely held in check by falling energy prices.
Rounding out trading in Comex metals, October platinum PLV19, -0.08% edged up by 90 cents, or 0.1%, to $830.90 an ounce, while September palladium PAU19, -0.14% lost $29, or 1.8%, to $1,559.10 an ounce.
Palladium had settled at a fresh record of $1,588.10 on Wednesday with unions reportedly holding talks with major South African mining companies, raising concerns over the potential a workers' strike.
September copper HGU19, +0.24% fell nearly a penny, or 0.2%, to $2.688 a pound.