Gold firms as the greenback weakens on Fed chief ’s dovish comments

NEW YORK/LONDON — Gold prices rose on Friday as the dollar came under pressure from clues about the direction of US monetary policy from Federal Reserve Chairman Jerome Powell, which market watchers interpreted as dovish.

The greenback weakened as Mr. Powell, speaking in Jackson Hole, Wyoming, said that a gradual approach to increasing benchmark interest rates remained appropriate to protect the US economy and keep job growth as strong as possible with inflation under control.

“It sounds like the Fed is starting to lean a little bit dovish and that is taking the wind out of the US dollar’s sail now,” said Shree Kargutkar, portfolio manager at Sprott Asset Management.

Spot gold had increased 1.8% to $1,206.14 an ounce by 1:43 p.m. EDT (1743 GMT), heading for a 1.9% weekly gain. US gold futures for December delivery settled up $19.30, or 1.6%, at $1,213.30 per ounce. UNDER PRESSURE

US political uncertainty, heightened by the legal woes of two of US President Donald Trump’s former advisers last week, is keeping the dollar under pressure despite tighter US monetary policy, analysts say.

A weaker US currency makes dollar-denominated gold cheaper for holders of other currencies, which could boost demand and prices.

A Reuters survey published on Thursday showed analysts expecting US rates to rise twice more this year and twice next year.

The Fed next meets over Sept. 25-26.

Higher rates raise the opportunity cost of holding gold, which can be costly to store and insure.

DIMINISHED APPEAL

“Investor appetite for gold has been in the doldrums in recent months. Rate hikes, low inflation, rising equity markets and a strong dollar have significantly diminished the appeal of gold,” ANZ analysts said in a note.

“The fall in gold prices could invigorate a pickup in physical demand,” they added.

“Overall we see gold prices stabilizing at current levels, with the probability of a shortcovering rally increasing substantially.”

Data on COMEX gold short positions held by speculators will be updated on Friday by the US Commodity Futures Trading Commission. Data showed hedge funds and money managers raising net short position for the sixth straight week to another record in the week to Aug. 14.

Spot silver was up two percent at $14.76 an ounce, barely changed from last week’s close. Platinum gained 1.9% at $789.50, closing the week nearly one percent higher. Palladium rose 1.9% at $932.99 per ounce, earlier hitting $939.25, its highest since July 26. It was more than two percent up from its close two weeks ago. —