* Fed’s Powell says U.S. on ‘disinflationary path’
* Fed minutes due out at 1800 GMT
* U.S. non-farm payrolls report due on Friday
July 3 (Reuters) – Gold prices strengthened on Wednesday as the dollar eased after dovish comments from Federal Reserve Chair Jerome Powell. Investors are now turning to minutes from the U.S. central bank’s latest policy meeting to gauge future interest rate cuts.
Spot gold rose 0.7% to $2,344.60 per ounce by 0846 GMT. U.S. gold futures gained 0.9% to $2,354.20.
Easing Dollar and Powell’s Comments
The strengthening of gold prices on Wednesday was primarily driven by the softening of the U.S. dollar after Fed Chair Jerome Powell’s acknowledgment that inflation in the U.S. is moving in the right direction. This has made bullion more attractive for holders of other currencies.
Additional Insight:
Powell’s comments indicating a disinflationary path for the U.S. have fueled uncertainty in the market, leading investors to seek safe-haven assets like gold.
Interest Rate Cuts and Market Expectations
Powell stated that the Fed still needs more data before cutting interest rates to ensure a clear picture of underlying price pressures. The market is now anticipating a 65% chance of interest rate cuts in September and December, which would reduce the opportunity cost of holding gold.
Upcoming Economic Data
Investors are eagerly awaiting the ADP employment and weekly jobless claims data, as well as the non-farm payrolls report scheduled for Friday. These reports will provide further insights into the health of the U.S. labor market, which could influence the Fed’s decision on interest rates.
Market Outlook and Price Movements
The World Gold Council’s mid-year outlook report suggests that there is a clear path for gold to outperform, especially with Western investor flows. However, a potential drop in central bank demand, prolonged high-interest rates, or a shift in Asian investor sentiment could lead to a pullback in the second half.
In terms of other precious metals, spot silver rose to a more than one-week high of $30.12 per ounce, while platinum and palladium also saw gains.
Overall, the gold market remains sensitive to economic data releases, central bank decisions, and investor sentiment, which will continue to drive price movements in the near future.
(Reporting by Daksh Grover in Bengaluru; editing by Miral Fahmy)
