Gold futures gave back almost all of the day’s gains on Tuesday after comments from Federal Reserve Chairman Jerome Powell raised some doubt over an interest-rate cut in July, but prices still settled a bit higher, holding at their finish since 2013.
Powell suggested said Tuesday that greater uncertainty about international trade and worries about global economic growth might be starting to show through to economic data, though Fed officials don’t know how long that may last or how serious the drag might be.
“The question my colleagues and I are grappling with is whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation,” Powell said, in remarks ahead of a moderated discussion at the Council on Foreign Relations in New York.
Following those comments, George Gero, managing director at RBC Wealth Management, told MarketWatch that he expected to see profit taking in gold. A July interest-rate cut has been widely expected by investors and economists, and gold tends to benefit from looser monetary policy.
August gold settled at $1,418.70 an ounce, the highest finish for a most-active contract since August 28, 2013, according to FactSet data. It posted a gain of just 50 cents, or 0.04%, after earlier trading as high as $1,442.90, which was the highest intraday level since May 2013. In electronic trading not long after the settlement, August gold climbed back up to $1,426.50.
Overall, gold has seen an “extraordinary march higher as global economic worries, political worries and U.S. politics underpin many bids from buyers, in many countries, as opportunity costs for buying gold have also lowered buyers’ resistance,” said Gero.
Expectations for lower interest rates among global central banks and geopolitical concerns have been making gold a preferred investment these days. The Japanese yen, another perceived haven investment, rose 0.2% against the dollar /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0745% . The yield on the 10-year note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +0.28% fell 2.8 basis points to 1.993%.
That follows declines among equities in Europe and Asia, and U.S. benchmark stock indexes traded lower in Tuesday dealings amid rising tensions between the U.S. and Iran. Investors also awaited a planned meeting between President Donald Trump and Chinese leader Xi Jinping to discuss trade issues at this week’s Group of 20 gathering in Japan.
Iran’s U.N. Ambassador Majid Takht Ravanchi warned of a “very dangerous” situation in the Persian Gulf, ruling out talks with the U.S. after President Donald Trump on Monday signed an executive order imposing financial sanctions on Iranian leaders. The moves comes days after calling a halt to airstrikes on the country, which shot down a U.S. military drone.
“Iran has said the door is shut for any diplomatic path and this means the uncertainty will continue to rise. This is likely to keep pushing the gold price higher and it can easily cross the level of $1,500,” said Naeem Aslam, chief market analyst at TF Global Markets, in a note to clients.
July silver fell 7.7 cents, or 0.5%, to $15.30 an ounce after gaining 3.3% last week.
July copper added 1.1% to $2.736 a pound. July platinum lost 0.2% to $809.80 an ounce, while September palladium climbed 0.3% to $1,532.50 an ounce.