Gold prices rose on expectations of a US interest rate hike next month and statements by US Federal Reserve Chairman Jerome Powell on the matter, while the dollar fell against the Japanese yen and its index stabilized during today’s trading.
gold
Gold prices continued to rise today, driven by statements by Federal Reserve Chairman Jerome Powell about cutting interest rates next September.
Spot gold rose 0.5% to $2,525.25 an ounce at the time of writing, while US gold futures rose 0.48% to $2,559.
Fed Chairman Powell said on Friday he supports cutting interest rates, adding that “the time has come” for the central bank to cut rates amid rising risks to the labor market even as inflation approaches the U.S. central bank’s 2% target.
According to the CME Group’s FedWatch tool, 64% of traders expect a 25 basis point rate cut next month, while 36% expect a larger cut of up to 50 basis points.
As for other precious metals, silver in spot transactions increased by 1.07% to $30.14 per ounce, platinum rose by 0.65% to $969.30, and palladium was stable at $962.
Dollar
The dollar fell to a three-week low against the yen today, as Federal Reserve Chairman Yu Yuan shifted strongly to monetary easing, in contrast to Bank of Japan Governor Kazuo Ueda, who spoke of monetary tightening.
The dollar approached a 13-month low against the euro and fell against the pound to levels last seen in March 2022, with Bank of England Governor Andrew Bailey saying it was “too early to declare victory” over inflation, suggesting a softer stance from the Federal Reserve on interest rate cuts.
The dollar fell about 0.66% to 143.45 yen for the first time since August 5, before falling 0.36% at the time of writing.
The pound was slightly lower at $1.3196 after jumping to $1.32295 on Friday for the first time in 17 months.
Despite Fed officials’ comments about monetary easing ahead of the annual Jackson Hole symposium, Powell used “stronger language” than his counterparts in his speech on Friday, said Tapas Strickland, head of market economics at National Australia Bank.
“The important thing is that it was noticeably devoid of phrases like ‘gradually’ and ‘gradually’, which effectively leaves the door open to further rate cuts,” Strickland said.
Ueda insisted on Friday during a briefing to parliament in Tokyo that the BOJ “needs to adjust the scale of easing,” a term the central bank uses to refer to another interest rate hike from a low level, and played down the significance of a July rate hike amid market turmoil, he added.
The dollar index, which measures the performance of the US currency against a basket of six major currencies including the euro, the British pound, the yen and the Swiss franc, was steady at 100.69 points, which is slightly below its 13-month low of 100.60 points reached at the end of last week.
