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Gold futures gained Wednesday, following the equity markets higher after comments from Federal Reserve Chair Jerome Powell raised expectations for lower interest rates soon.
Two days of congressional testimony from Powell appeared to indicate a favorable tilt toward cutting rates, saying progress is being made in the Fed’s effort to move the economy into better balance and bring inflation down, and “more good data would strengthen” the case for loose monetary policy.
“Powell did not deliver any hawkish surprises in his speech to the Senate yesterday, and that kind of assuaged the marketplace about any notions the Fed would not be able to cut interest rates yet this year,” Kitco Metals analyst Jim Wyckoff said, according to Reuters.
Traders will get a fresh look at inflation Thursday morning with the June consumer price index report, which economists expect will add to recent data showing inflation is easing.
Further indications of a cooling economy could spark more appetite for investing in gold ETFs, Peter Cardillo of Spartan Capital Securities said, Dow Jones reports.
Front-month Comex gold (XAUUSD:CUR) for July delivery closed +0.5% to $2,372.20/oz, but front-month July silver (XAGUSD:CUR) settled -0.1% to $30.727/oz.
ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)
Data from the World Gold Council this week showed a net inflow for gold ETFs globally for a second straight month in June, with Europe and Asia receiving net inflows – Europe bought 17.5M metric tons and Asia purchased ~7M tons – partially offset by selling in North America, which shed 8.2M tons.
Rate cuts seen in Europe are helping spark investor optimism there, leading them to gold, WGC said.
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