BENGALURU- Gold prices gained more than 1 percent on Friday as the dollar and Treasury yields retreated following comments from Federal Reserve Chair Jerome Powell that signaled an interest rate cut in September.
Spot gold rose 1.2 percent to $2,512.63 per ounce but was off a record high of $2,531.60 hit on Tuesday. US gold futures settled 1.2 percent higher at $2,546.30.
Powell said “the time has come” for the US central bank to cut interest rates and that inflation was nearing the Fed’s 2 percent target, offering an explicit endorsement of an imminent policy easing.
The dollar index fell 0.8 percent against its rivals, while benchmark US 10-year yields also declined following Powell’s speech, making gold more attractive for other currency holders.
“Asset markets are reacting well, at least initially, to Powell’s general, but somewhat open-ended comment that it’s time for policy to adjust,” said Tai Wong, a New York-based independent metals trader.
“Gold will continue to grind higher ahead of the September Fed meeting and the updated dot plot which will indicate how many likely cuts this year.”
Lower US interest rates also generally increase the relative appeal of zero-yield bullion.
