Investing.com – The gold market is betting that Fed Chief Jerome Powell will deliver with tamer rate hikes in the New Year — or maybe no hikes at all.
Benchmark of the yellow metal in New York hit one-week highs in Thursday’s trade, extending the previous session’s run-up, which ended with the biggest one-day gain in more than a month, after Powell signaled a stepback of his hawkish stance.
February futures on COMEX settled up $6, or 0.5%, at $1,230.40 per troy ounce. The session high was $1,234.60, a peak not seen since Nov. 21. On Wednesday, February gold settled up or 0.8% for its biggest one-day advance since Oct. 23.
In his speech at the New York Economic Club on Wednesday, Powell said the Fed’s “gradual pace of raising interest rates has been an exercise in balancing risks,” but added “there is no preset policy path.” That sent a dovish signal to traders that the central bank will do the much-anticipated fourth rate hike of 2018 in December, then hold off for 2019 depending on how well the U.S. economy performs,
In its November policy meeting minutes, released 30 minutes after COMEX gold’s settlement on Thursday, the Fed indicated a December rate hike was likely as it touted steady inflation and strong labor market data. But there was little clarity on what the central bank’s thinking was further down the road, leaving Powell as gold traders’ best bet for now.
“Gold is taking comfort from the remarks yesterday by Chairman Powell, who has lifted a major burden from the shoulders of gold investors,” said George Gero, precious metals analyst at RBC Wealth Management in New York.
“Next year’s impaired agricultural commodity outlook due to predictions of horrible storms, as well as Brexit pressures and deficits in the U.S., also gives plenty of reasons for gold to be a haven besides the dollar,” Gero added.
The , a contrarian bet to gold, was up 0.1% at 96.787 by 2:34 PM ET (19:34 GMT), 30 minutes after the release of the Fed’s November meeting minutes. The rose 0.2%.
Fed-watch aside, investors across financial markets are on the lookout for any possibility of a trade war resolution between the U.S. and China at the G20 summit beginning Friday in Buenos Aires.
A U.S.-China trade deal could go either way for gold, as Chinese physical demand for bullion could ramp up prices while an equities rally could also pull money out of the yellow metal. President Donald Trump will meet his Chinese counterpart Xi Jinping for a working dinner during the G20 Saturday.
Among other precious metals on COMEX, fell 0.5% to $14.39 per ounce.
climbed 0.1% to $1,153.30 per ounce, while sister metal slid 0.6% to $821.30.
In base metals, COMEX shed 0.8% to $2.79 per pound.
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