(Bloomberg) — Gold advanced as traders weigh the outlook for US monetary policy ahead of a key speech by Federal Reserve Chair Jerome Powell later this week.
Powell is slated to give his annual address in Jackson Hole, Wyoming, on Friday. Swaps are pricing in a high probability the Fed will cut borrowing costs by a quarter point next month. Lower rates benefit gold as it doesn’t pay interest.
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Still, the Fed’s monetary easing path has been complicated by a hotter-than-expected inflation print last week that caused some traders to dial back rate-cut expectations. In the face of mounting pressure from President Donald Trump for hefty reductions, Powell has expressed concern about inflation, with import tariffs at the highest levels in a century.
Markets are also watching US and European efforts toward a landmark meeting between Presidents Vladimir Putin and Volodymyr Zelenskiy. Any signs of a Russia-Ukraine ceasefire could ease demand for the precious metal as a haven, but a peace deal is still elusive.
Gold has climbed more than a quarter this year, as trade-war fears and geopolitical tensions boosted its appeal as a safe asset, while central bank buying and inflows to exchange-traded funds also provided support. Though it has traded in a relatively tight range since reaching a record at roughly $3,500 in April, banks like UBS Group AG and Citigroup Inc. expect further gains.
Spot gold added 0.8% to $3,344.12 an ounce as of 12:40 p.m. in New York. The Bloomberg Dollar Spot Index was 0.1% lower. Silver, platinum and palladium all gained.
In base metals, copper rose 0.4% to $9,728 a ton on the London Metal Exchange. Aluminum and zinc edged higher.
–With assistance from Jack Ryan and Yvonne Yue Li.
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