Gold gave up some of its recent gains early Wednesday after comments by U.S. Federal Reserve Chairman Jerome Powell seemed to indicate that an interest-rate cut in July isn’t a done deal. Prices remained above $1,400 an ounce, near a six-year high. Analysts in Reuters indicated that profit taking was also behind the dip.
This morning’s mixed economic news including slumped Durable Goods Orders failed to significantly move gold’s needle as the focus is on the Fed Chair’s comments.
While “many” members of the policy-setting Federal Open Market Committee think the case to cut rates “has strengthened,” Powell said they are “also mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment. Doing so would risk adding even more uncertainty to the outlook.”
The CME FedWatch Tool kept the odds of a rate cut on July 31 at 100% as of this morning. It was 86.3% a week earlier, the day before the latest policy decision.
Powell also said that downside risks to the economy have increased. Just before he spoke yesterday, U.S. consumer confidence in June dropped to the lowest level since September 2017, according to Conference Board data Tuesday. Finalized first-quarter GDP numbers come out Thursday.
The dollar is near a three-month low in the leadup to a meeting Saturday between U.S. President Donald Trump and Chinese President Xi Jinping on the sidelines of the Group of 20 summit in Japan. Washington hopes to restart trade talks with Beijing after the meeting, but the U.S. won’t accept any conditions around the use of tariffs in the dispute, Reuters reported, citing an unidentified senior administration official.
Gold futures for August delivery rose 0.3 percent Tuesday to settle at $1,418.70 an ounce on Comex. They gained 5.5% the first two trading days of the week. This morning, the August contract sit at $1,411.60.
Silver futures fell 0.5% to $15.30 an ounce on Tuesday. The metal extended the drop early Wednesday. Currently, the August contract is $15.29. Spot platinum, which is sensitive to the growth of the Chinese automotive industry, decreased 0.6% on Tuesday, while spot palladium declined 0.5%. This morning finds platinum down just 0.20%, while palladium is up 0.44%.
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