Gold remained close to a two-week high in Asian trade Thursday, supported by rising expectations that the Federal Reserve could cut interest rates in September amid ongoing tensions between President Donald Trump and the central bank.
Spot gold approached $3,400 per ounce this week but stalled just below that threshold as the U.S. dollar strengthened slightly and Treasury yields steadied.
Concerns over the Fed’s independence drove much of the market focus this week, following Trump’s attempt to dismiss Governor Lisa Cook. Both Cook and the Federal Reserve questioned the legality of the move, with Cook also signaling possible legal action to retain her post.
Spot gold dipped 0.2% to $3,389.96 per ounce, while October futures advanced 0.4% to $3,445.32 per ounce by 01:37 ET (05:37 GMT).
Speculation Mounts on September Rate Cut
The attempted firing of Cook has raised fears about the Fed’s autonomy, prompting investors to increase bets on a September rate cut. Following comments last week from Fed Chair Jerome Powell that such a move was possible, CME FedWatch shows an 84.9% probability of a 25-basis-point reduction, up from 78.4% a week ago.
Powell acknowledged some softening in the labor market but remained cautious on committing to any rate changes, citing uncertainty over the inflationary effects of Trump’s policies.
The dollar’s retreat on rate cut expectations supported precious metals, even as it recovered some ground later in the week.
Spot platinum remained steady at $1,349.08 per ounce, while silver rose 0.3% to $38.6975 per ounce. Industrial metals saw mixed moves: London Metal Exchange copper futures rose 0.3% to $9,789.60 per ton, whereas COMEX copper futures dipped 0.2% to $4.4915 per pound. Lower interest rates generally favor non-yielding assets like metals by reducing their opportunity cost.
Focus on Upcoming U.S. Economic Reports
Investors now await a slew of U.S. economic indicators. A revised reading of second-quarter GDP, due later Thursday, is expected to show strong quarter-on-quarter growth of 3%.
The most closely watched release will be the July PCE price index, scheduled for Friday. As the Fed’s preferred measure of inflation, it is expected to indicate that prices remain steady and above the central bank’s 2% target, providing guidance on potential future monetary policy moves.
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