Gold Edges Higher After Powell Signals No Rush to Cut Rates
(Bloomberg) -- Gold edged higher as traders digested Jerome Powell’s comments signaling that the Federal Reserve has no plans to lower interest rates in the near term.
Most Read from Bloomberg
Dubai Grinds to Standstill as Cloud Seeding Worsens Flooding
What If Fed Rate Hikes Are Actually Sparking US Economic Boom?
China Tells Iran Cooperation Will Last After Attack on Israel
Powell Signals Rate-Cut Delay After Run of Inflation Surprises
US Yields Spike as Hawkish Powell Puts 5% in Play: Markets Wrap
Powell said Tuesday that it will likely take longer to gain confidence that price growth is heading toward the Fed’s goal, remarks that followed a string of surprisingly strong US inflation readings. The Fed chief also said it’s appropriate to give the US central bank’s restrictive policy further time to work.
Treasury yields climbed to fresh 2024 highs and the dollar rose after Powell’s comments, while bullion held modest gains.
For gold traders, Powell’s remarks didn’t break much new ground, although his comments suggested a May rate cut is off the table and June is increasingly unlikely. Swap markets show the Fed will only begin easing in September, after indicating July a week ago. Lower rates are generally positive for gold as it pays no interest.
Earlier Tuesday, Fed Vice Chair Philip Jefferson said that while there has been considerable progress in slowing consumer price gains, the Fed’s task of sustainably restoring 2% inflation is “not yet done.” His San Francisco counterpart Mary Daly reiterated late Monday that there’s no urgency to adjust interest rates, pointing to solid economic growth, a strong labor market and still-elevated inflation.
The precious metal remains in a weeks-long uptrend as investors seek safety amid growing geopolitical tensions, which helped bullion chalk a 1.7% gain on Monday.
Long-standing supports — including robust buying by central banks and increased demand from Chinese consumers — are also underpinning prices.
The Reserve Bank of India continued its gold purchases in March, according to a post on X from Krishan Gopaul, investment research analyst at the World Gold Council. Year-to-date purchases of nearly 19 tonnes now exceed its 2023 net purchases of 16 tonnes, he added.
Citigroup Inc. raised its 2024 gold estimate to $2,350 an ounce and made a “massive 40% upward revision” to its 2025 forecast to $2,875, it said in a note. That came after Goldman Sachs Group Inc. said Friday the metal was in an “unshakable bull market,” raising its year-end prediction to $2,700.
Spot gold was up 0.5% at $2,394.81 an ounce as of 3:26 p.m. in New York. The Bloomberg Dollar Spot Index added 0.3%. Silver, platinum and palladium all declined.
--With assistance from Sybilla Gross and Jack Ryan.
Most Read from Bloomberg Businessweek
A Resilient Global Economy Masks Growing Debt and Inequality
Cities Use AI to Help Ambulances and Firetrucks Arrive Faster
The Shadow Swiftie Economy Booms With Bootleg Bracelets and $1,150 Bodysuits
Top Takeaways From Businessweek’s Investigation of Teenage Sextortion
©2024 Bloomberg L.P.