Metals Stocks
Gold futures end at 1-week high as U.S. dollar dips on dovish remarks from Fed Chair Powell
Published: July 10, 2019 at 2:10 p.m. ET
Myra P. Saefong and
William Watts
Palladium marks another record finish as unions hold talks with South African miners
Gold futures climbed sharply on Wednesday to log their highest finish in a week, as the U.S. dollar weakened on remarks from U.S. Federal Reserve Chairman Jerome Powell that were perceived as dovish.
In testimony to Congress, Powell said Wednesday that the U.S economy is suffering from trade policy uncertainties and slower global economic growth and he pledged again that the central bank would act as needed to support demand.
The Fed would closely monitor developments "and would act as appropriate to sustain the expansion," Powell said, repeating a pledge made in June.
Powell "did not seek to temper market expectations for rate cuts. In fact … he actively goaded on these expectations," said Ryan Giannotto, director of research at GraniteShares. Powell's testimony is "particularly bullish for gold."
Against that backdrop, gold for August delivery on Comex US:GCQ19 rose $12, or 0.9%, to settle at $1,412.50 an ounce, settling at the highest for a most-active contract since July 3. September silver US:SIU19 added 7.9 cents, or 0.5%, to $15.226 an ounce. Precious metals tend to draw buying in a low interest-rate climate.
Minutes from the Federal Open Market Committee meeting in June, released shortly after prices for the metals settled on Comex, revealed that only a "few" Fed officials argued against an interest rate cut last month. In electronic trading shortly after the release of the minutes, August gold edged higher from the settlement to $1,416.90.
In remarks early Wednesday Powell appeared to be "hinting toward a rate cut while also trying to avoid panicking investors wondering about the outlook for corporate earnings and questioning valuations," said Colin Cieszynski, chief market strategist at SIA Wealth Management. " It also sounds like the Fed may be looking at a 'one-and-done' cut rather than the start of a prolonged easing program."
Powell will hold another day of testimony before Congress on Thursday.
The ICE U.S. Dollar Index DXY, -0.23%, a measure of the U.S. currency against a basket of six major rivals, was trading 0.4% lower Wednesday at 97.08. A weaker dollar can be a supportive for commodities priced in the greenback, making them less expensive to users of other currencies.
Fed-funds futures traders on Wednesday raised bets on a half-point cut in interest rates by the Fed at the end of the month, according to CME Group's FedWatch tool. Traders see a 16.3% change the Fed cuts its official policy rate by 50 basis points on July 31.
Meanwhile, palladium was a standout among metals Wednesday, as the September palladium contract US:PAU19 jumped by $48.20, or 3.1%, to settle at a fresh Comex record of $1,588.10 an ounce.
Top platinum miners began talks with South Africa's employee unions on Tuesday, according to a recent report from Reuters. Wages are likely to be a hot topic, raising the concerns over a possible strike.
Among other metals, October platinum US:PLV19 rose $14.90, or 1.8%, to $830 an ounce. September copper US:HGU19 rose 6.9 cents, or 2.6%, to $2.694 a pound.
The SPDR Gold Shares exchange-traded fund GLD, +1.63% added 1% in Wednesday dealings.
Read:Gold-backed ETF assets in June logged their biggest monthly rise in seven years
Myra P. Saefong
Myra P. Saefong, assistant global markets editor, has covered the commodities sector for MarketWatch for 20 years. She has spent the bulk of her years at the company writing the daily Futures Movers and Metals Stocks columns and has been writing the weekly Commodities Corner column since 2005.
William Watts is MarketWatch's senior markets writer. Based in New York, Watts writes about stocks, bonds, currencies and commodities, including oil. He also writes about global macro issues and trading strategies. Before moving to New York, he reported for MarketWatch from Frankfurt, London and Washington, D.C.