Moneycontrol
Get App
you are here: HomeNewsWorld
Last Updated : Aug 24, 2019 12:24 PM IST | Source: Reuters

Gold soars 2% after Powell speech, Donald Trump tweets

Jerome Powell's speech prompted a backlash from Trump on Twitter, asking whether the Fed chair was a greater "enemy" than China's leader Xi Jinping.

Gold surged 2% on August 23 as investors interpreted US Federal Reserve Chair Jerome Powell's speech as leaning toward a dovish monetary policy stance and President Donald Trump's latest comments exacerbated trade tensions with China.

Spot gold rose 1.9% at $1,526.60 an ounce by 14:08 pm EDT (1801 GMT), shaking off slight headwinds ahead of the Fed Chair's speech.

Prices earlier rose to $1,528.79, the highest since Aug. 13, when spot gold had scaled a six-year peak of $1,534.31.

Close

US gold futures settled up 1.9% to $1,537.60.

"The fact that he (Powell) said that they (the Fed) will act appropriately to sustain expansion is pretty bullish for gold. The two primary tools they have are quantitative easing (QE) or lower rates - both those tools will cause gold to go higher," said Bob Haberkorn, senior market strategist at RJO Futures.

"The move this morning is just more people buying gold simply with the expectations that interest rates will be lower by year-end."

Powell said the US economy is in a "favorable place," but gave few clues about interest rate cuts at its next meeting. However, he listed a series of economic and geopolitical risks the Fed is monitoring, noting these were linked to the trade spat.

"We shouldn't be surprised if we see the Fed deliver a full percentage point in rate cuts over the next 12 months and a new QE program as we may only need a couple of the following macro events to blow up: trade uncertainties, weakness in China and Germany, Brexit, Hong Kong, and the dissolution of the Italian government," Edward Moya, a senior market analyst at OANDA, said in a note.

Powell's speech prompted a backlash from Trump on Twitter, asking whether the Fed chair was a greater "enemy" than China's leader Xi Jinping.

Trump also ratcheted up the rhetoric on China, ordering US companies to look at ways to close operations in the country, which sent equities tumbling and drove further inflows into safe-haven gold.

This came after China unveiled retaliatory tariffs against about $75 billion worth of US goods.

"This means there is no resolution, the escalation continues. Investors are selling the risk and buying gold," said SP Angel analyst Sergey Raevskiy.

Gold has risen nearly 8% so far this month and about 19% this year, and was set for a fourth straight week of gains.

Elsewhere, silver gained 2.3% to $17.39 an ounce, while platinum was up 0.1% at $858.11.

Palladium fell 1.7% to $1,461.83 an ounce, but the auto catalyst metal remained on track for a third straight weekly gain of about 0.9%.

Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Aug 24, 2019 12:14 pm
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant