Gold prices continue to rise on Thursday by finding support from weaker dollar after jumping above $1,400 an ounce following Fed’s Chair Jerome Powell’s dovish statements which increased expectations for a possible rate cut at the end of July. Powell said concerns regarding trade tensions and slowing global economy continued to weigh on US economic outlook and the central bank would act as appropriate to sustain economic growth. In Fed minutes released after Powell’s testimony, it was seen that policymakers agreed on downside risks while some stated that a rate cut could help cushion the effects of possible future adverse shocks to the economy.
After rising sharply by finding support from weakening dollar due to Fed Chair Jerome Powell’s statements yesterday which signalled a rate cut this month, gold kept its upside momentum on Thursday following Fed minutes.
As of 13:33 GMT+3, spot gold was trading at $1,421.87 an ounce while dollar index was down to 96.91. US 10-year Treasury yield was steady 2.061.
OCBC Bank economist Howie Lee said on Reuters that Powell made sure a rate cut would be on the table in July meeting while adding looser monetary policy stance created the base for gold prices to increase further.
Fed Chair Jerome Powell stated yesterday that, considering incoming data and developments since May, uncertainty around trade tensions and concerns on slowing global economy continued to weigh on US economic outlook while stating the central bank would act as appropriate to sustain economic growth. Powell said, trade truce between the US and China and decision to resume trade talks failed to remove uncertainty around trade relations while adding this had been damaging business investments. Powell also said, it seemed US economy slowed down in the Q2 while adding risks had arisen regarding weakness in inflation being more persistent than Fed previously anticipated.
In Fed minutes from its last meeting released after Powell’s testimony, it was seen that Fed policymakers agreed on downside risks had arisen regarding US economic outlook and some officials stated a rate cut could help cushing the effects of possible reverse economic shocks to the economy. Officials also stated weakness in inflation could risk sustainable upside movement to 2% target while some policymakers said there was not yet a strong case for a rate cut from current levels. Despite this, Fed is expected to cut the rates by 25 basis point in its meeting at the end of this month.