Gold hits four-week high as Feds Powell eases stimulus concerns
Gold climbed to a four-week high as inflation concerns boosted demand for the metal as a store of value while Federal Reserve Chair Jerome Powell reassured investors on the outlook for stimulus. Copper and most other base metals fell.
Powell said Wednesday in congressional testimony that the recovery hasn't progressed enough to begin paring the central bank's monthly asset purchases. Data released on Tuesday showed prices paid by U.S. consumers surged in June by the most since 2008.
Gold has been on the mend after its worst month since 2016 in June, when it was hurt by signals that the Fed could increase interest rates sooner than expected to counter inflation. Stimulus by central banks and governments since the pandemic helped bullion reach a record high in 2020, but vaccine rollouts and reopening economies have eroded demand for the metal as a haven.
"The market seems to have decided that the tapering talks will not be hurried in light of the latest big jump in inflation," said Fawad Razaqzada, a market analyst at ThinkMarkets. For now, "the market is still giving the Fed the benefit of the doubt by the looks of things," he said.
Spot gold gained 0.7% to $1,820.14 an ounce by 10:39 a.m. in New York, after touching $1,829.89, the highest since June 16. Silver and platinum also climbed, while palladium dropped. The Bloomberg Dollar Spot Index lost 0.5%, adding to demand for bullion as an alternative asset.
Nickel led a decline in base metals on the London Metal Exchange as China underlined its commitment to containing commodity prices and the surprise surge in U.S. consumer prices fueled inflation worries. Nickel slipped 1.1%, while copper lost 0.5%.
