By Anushree Ashish Mukherjee
(Reuters) – Gold prices climbed 1% as the dollar and Treasury yields retreated following Federal Reserve Chair Jerome Powell comments signalling an interest rate cut in September.
Spot gold rose 1% to $2,508.88 per ounce by 10:42 a.m. ET (1442 GMT), but was off a record high of $2,531.60 hit on Tuesday. U.S. gold futures gained 1.2% to $2,546.20.
Powell said “the time has come” for the U.S. central bank to cut interest rates and inflation was in reach of the Fed’s 2% target, offering an explicit endorsement of an imminent policy easing.
The dollar index fell 0.6% against its rivals, while benchmark U.S. 10-year yields also declined following Powell’s speech, making gold more attractive for other currency holders.[USD/][US/]
“Asset markets are reacting well, at least initially, to Powell’s general, but somewhat open-ended comment that it’s time for policy to adjust,” said Tai Wong, a New York-based independent metals trader.
“Gold will continue to grind higher ahead of the September Fed meeting and the updated dot plot which will indicate how many likely cuts this year.”
Lower U.S. interest rates also generally increase the relative appeal of zero-yield bullion.
Expectations of a rate cut could push gold to the $2550-$2600 range, said Alex Ebkarian, chief operating officer at Allegiance Gold.
Traders are expecting a 67.5% chance of a 25 basis points cut in September, while 32.5% expect a deeper 50 bps cut.
Silver rose 2.1% to $29.60 per ounce and was up nearly 2.1% for the week.
India’s silver imports are on course to nearly double this year due to rising demand from solar panel and electronics makers, leading importers said.
Platinum gained 1.5% to $958.35 and palladium was up 1.6% at $947.50.
(Reporting by Anushree Mukherjee and Brijesh Patel in Bengaluru; Editing by Sharon Singleton and Vijay Kishore)
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