NEW YORK: Gold bounced nearly 1% on Friday after Federal Reserve Chair Jerome Powell stopped short of signaling when the US central bank would start withdrawing its economic support and reiterated his view that current price spikes are transitory.
Spot gold was up 0.9% to $1,807.56 per ounce by 11:19 a.m. EDT (1519 GMT). US gold futures rose 0.8% to $1,809.20.
“They’re not going to raise rates anytime soon and (bond-buying) taper talk won’t come back into play until next week’s jobs report. That cleared the path for gold, and as it broke above $1,800, it’s eying the next resistance level around $1,818-$1820,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
In a speech to the Jackson Hole economic conference, Powell signalled the US central bank will remain patient and repeated that he wants to avoid chasing “transitory” inflation and potentially discouraging job growth in the process - a defense in effect of the current approach to Fed policy.
“Bolstering gold, Powell used the Delta ‘shield’ to buy time for more employment data before a taper announcement. It’s clear that the Fed won’t make a taper announcement until September or ideally November,” a trader based in New York said.
While gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion and boost the dollar.
Lending a further boost to bullion, benchmark US Treasury yields and the dollar weakened after Powell’s comments.
“You’d need next week’s jobs report to show a miss, a resurgence of the Delta variant or geopolitical risks with more news coming from Afghanistan for gold to break substantially higher,” Streible said.
Silver rose 1.4% to $23.88, heading for its best week since May.
Platinum rose 2.8% to $1,006.77 an ounce, while palladium climbed 1.2% to $2,420.71.