Gold prices crept up to record highs in Asian trade on Tuesday, buoyed chiefly by increased haven demand as recent comments from Federal Reserve officials sparked some caution over future interest rate cuts.
Markets were also on edge before a string of key U.S. economic signals this week, most notably an address by Fed Chair Jerome Powell later on Tuesday. Purchasing managers index data for August is also due today, while a key inflation gauge is on tap later in the week.
Uncertainty over U.S. policy added to risk aversion, after U.S. President Donald Trump announced steep fees on a popular work visa. Trump on Monday also made disputed claims on vaccines, autism, and a popular painkiller, which caused ructions in pharmaceutical stocks.
A pullback in risk-driven markets, such as Asian equities, benefited haven demand for gold. Chinese stocks tumbled on Tuesday following a strong run-up in the past month.
Spot gold rose to a record high of $3,759.18 an ounce, while gold futures hit a peak of $3,794.82/oz.
Fed comments spur rate cut caution, Powell speech awaited
Several Fed officials on Monday struck a cautious stance on expectations of more interest rate cuts by the central bank, with Atlanta Fed President Raphael Bostic stating in an interview that he did not favor an October rate cut on caution over sticky inflation.
Cleveland Fed president Beth Hammack also echoed Bostic’s concerns, stating that current policy was not restrictive enough. Both Fed members are not part of the central bank’s rate-setting board.
Board member Stephen Miran, who only took the position a week ago, kept up his calls for substantially lower interest rates, largely echoing Trump’s stance that rates should fall. Miran was a sole dissenter in the Fed’s meeting last week, calling for a 50 basis point cut over the 25 bps the central bank enacted.
Fed Chair Powell had last week said the cut was motivated chiefly by concerns over a slowing labor market, and that the Fed will ease policy further on more signs of job weakness.
But Powell also flagged continued concerns over sticky inflation, especially in the face of Trump’s tariffs. The Fed Chair will speak at 12:35 ET (16:35 GMT).
Metal prices had benefited from the Fed’s rate cut last week, although they mostly lagged gains in gold. Spot platinum rose 0.3% to $1,421.05/oz, while spot silver rose 0.2% to $44.313/oz on Tuesday.
Among industrial metals, benchmark copper futures on the London Metal Exchange fell 0.3% to $9,975.05 a ton, while COMEX copper futures fell 0.5% to $4.6275 a pound.
US PMIs, PCE data awaited this week
U.S. PMI data for September is due later on Tuesday, offering up more cues on business activity in the world’s largest economy. The print is expected to show slightly slower growth in both manufacturing and services activity, and could spur some concerns over a cooling U.S. economy.
PCE price index data– which is the Fed’s preferred inflation gauge– is due this Friday, and will be the week’s main economic event. The print is expected to show inflation remained sticky in August, with core PCE inflation remaining above the Fed’s 2% annual target.
Before the PCE data, markets will also be watching a final reading on second-quarter gross domestic product growth. Earlier prints showed the world’s largest economy growing more than expected in the June quarter, despite headwinds from tariffs.
Source :
https://www.investing.com/news/commodities-news/gold-prices-hit-record-highs-over-3750oz-on-rate-caution-powell-speech-awaited-4250341
