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Gold hits 1-wk high as comments from Fed's Powell stoke rate cut bets

Thursday,   11-Jul-2019   09:06 AM (IST)

Gold prices rose to their highest in over a week on Thursday as the dollar pulled back from multi-week highs after comments from Federal Reserve Chairman Jerome Powell bolstered expectations for an interest rate cut later this month. Spot gold was up 0.4% at $1,423.80 per ounce as of 0112 GMT, after earlier hitting its highest since July 3 at $1,426. U.S. gold futures jumped 1.1% to $1,427.40 an ounce. In an appearance before his congressional overseers on Wednesday, Powell confirmed that the U.S. economy is still under threat from disappointing factory activity, tame inflation and a simmering trade war. Powell said the central bank stands ready to “act as appropriate”. Adding to a generally dovish tone in his testimony, the minutes from the Fed’s previous policy meeting showed many policymakers thought more stimulus would be needed soon, reviving speculation of an aggressive rate cut. The dollar index pulled back from a three-week peak and the U.S. Treasury yield curve steepened in the wake of Powell’s comments. Money market futures price have jumped to price in about a 30% chance that the Fed will cut rates by 50 basis points at its next policy review on July 30-31 - a scenario that had been priced out after Friday’s strong U.S. jobs data. Lower U.S. interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion. Asian stocks rose on Thursday following Powell’s comments. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.81 percent to 800.54 tonnes on Wednesday from 794.08 tonnes on Tuesday.