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Gold jumps over 1% as U.S. Fed’s Powell strikes dovish tone

Gold jumped more than 1% on Thursday as investors cheered U.S. Federal Reserve Chairman Jerome Powell’s comments suggesting the central bank was unlikely to hike rates anytime soon.

· Spot gold was 1.3% higher at $1,830.11 per ounce by 2:19 p.m. ET, having hit its highest since July 15 at $1,832.40.

· U.S. gold futures settled 1.8% higher at $1,831.2 per ounce.

· SPDR GOLD HOLDINGS:

· Powell said the U.S. job market still had “some ground to cover” before it would be time to pull back support to the economy.

· “You’re going to see inflation heat up moving forward because the Fed is more focused on employment and is not going to fight them in the near-term and that is a positive environment for precious metals,” said David Meger, director of metals trading at High Ridge Futures.

“This is not a flash-in-the-pan type rally but a more sustainable one because nothing is standing in gold’s way.”

· Reinforcing Powell’s views, data showed the U.S. economy grew at a 6.5% annualized rate last quarter, below a forecast for an 8.5% rise by economists in a Reuters poll.

· Lower U.S. interest rates reduce the opportunity cost of holding non-yielding bullion.

· Adding to gold’s support, the dollar index slipped to a one-month low.

· “Rising monetary policy uncertainty, inflation and increasing risk of equity market volatility should favor demand for safe-haven assets,” ANZ Research said in a note.

· Gold prices will average a little above their current level of $1,830 an ounce for the remainder of 2021 before easing in 2022, a Reuters poll showed.

· Silver jumped 2.8% to $25.62 per ounce after hitting its highest since July 16.

· Platinum added 0.1% to $1,065.61 an ounce, and palladium gained 0.8% to $2,647.62.

· Analysts surveyed by Reuters revised up their palladium forecasts as a chronic shortage of the metal is expected to keep prices close to record levels.

· Dollar at lowest in a month after Fed knock; U.S. data disappoints

The dollar fell to a one-month low on Thursday, a day after the U.S. Federal Reserve said the job market still had “some ground to cover” before it would be time to ease monetary stimulus, taking the steam out of a monthlong rally by the greenback.

The dollar index, which measures the greenback against a basket of six other currencies, was down 0.48% at 91.98, its lowest since June 29.

The euro gained 0.39% against the dollar, to 1.1886.

· US GDP grew 6.5 percent in second quarter, falling short of expectations

US GDP surged 6.5 percent in the second quarter of the year, falling short of expectations as business reopenings and government aid fueled the recovery, but inflation and shortages held growth back.

America’s gross domestic product — the value of all goods and services produced here — grew by 6.5 percent from April to June compared with the same period a year ago, the feds said Thursday.

Economists polled by Dow Jones and The Wall Street Journal expected an annualized growth rate of 8.4 percent.

· US jobless claims drop by 24,000 to 400,000, another sign of strength for a rebounding economy and job market

· U.S. pending home sales decline in June

Contracts to purchase previously owned U.S. homes declined in June in step with a spike in home prices after rebounding strongly in the prior month.

The National Association of Realtors (NAR) said on Thursday its Pending Home Sales Index, based on contracts signed last month, fell 1.9% to 112.8. Economists polled by Reuters had forecast pending home sales would increase 0.3%.