Gold eases as dollar firms, but Fed turmoil limits losses

Gold prices edged lower on Wednesday, pressured by an uptick in the dollar, although renewed concerns over the U.S. central bank’s independence after President Donald Trump’s threat to fire Federal Reserve Governor Lisa Cook lent support to bullion.

Spot gold was down 0.2% at $3,384.49 per ounce, as of 0223 GMT, after hitting its highest level since August 11 on Tuesday.

U.S. gold futures for December delivery were flat at $3,434.20.

The dollar index rose about 0.2% against its rivals, making gold less attractive for other currency holders.

“Short-term speculators are taking a bit of profit right now. However, gold is still being supported especially as we start to see a much more clear dovish stance from the Federal Reserve,” OANDA senior market analyst Kelvin Wong said.

“We could see in the near term there is still potential upward pressure to test $3,400, above it will be the $3,435 level.”

Trump said he was removing Cook over alleged improprieties in obtaining mortgage loans, a step that could test the boundaries of presidential power over the U.S. Fed.

In response, Cook said Trump has no authority to fire her from the central bank, and she will not resign.

Trump has been pushing the U.S. central bank to cut rates and has repeatedly criticised Fed Chair Jerome Powell for acting too slow.

Focus now shifts to the Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gauge, due on Friday for more cues on interest rate path after dovish remarks from Powell at Jackson Hole symposium last week.

Markets are now pricing in an 87% chance of a quarter-point rate cut at the Fed’s September 17 policy meeting, according to CME FedWatch Tool.

Non-yielding gold typically performs well in a low-interest-rate environment.

Elsewhere, spot silver eased 0.1% to $38.56 per ounce, platinum gained 0.2% to $1,351.50 and palladium climbed 0.6% to $1,101.02.