NEW YORK: Gold prices hit a more than two-week high on Tuesday after US President Donald Trump said he was removing Federal Reserve Governor Lisa Cook, a move seen by many as eroding the central bank’s independence and undermining confidence in US assets.
Spot gold was up 0.2 percent at USD3,371.30 an ounce at 1025 GMT, having hit its highest since August 11 at USD3,386.27 earlier in the session. US gold futures for December delivery were steady at USD3,418. Trump on Monday took the unprecedented action of firing Cook over mortgage borrowing impropriety claims.
Investors are seeing Trump’s move as an attempt to secure a dovish majority in the Fed’s members, said Carlo Alberto De Casa, an external analyst at banking group Swissquote, adding that this raises questions about the Fed’s independence and adds market uncertainty that prompts investors to buy gold.
Prices of non-yielding bullion tends to perform well when interest rates are low and in times of economic uncertainty. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose by 0.18 percent to 958.49 metric tons on Monday, from 956.77 tons on Friday. Fed Chair Jerome Powell on Friday signalled a possible rate cut next month, saying that job market risks were rising but inflation remained a threat. “Markets are pricing a 25 bps rate cut (in September).
A jumbo cut would help gold further, but I don’t see this as a likely scenario,” De Casa added. Investors are awaiting further inflation data on Friday for more clues on the central bank’s monetary policy path.
Elsewhere, spot silver fell 0.2 percent to USD 38.47 an ounce, platinum was down 0.4 percent at USD1,337.60 and palladium rose 0.3 percent to USD1,089.89.
Comments
Comments are closed for this article.