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Gold Prices Drift Lower as Fed Chair Powell Promises Only ‘Appropriate’ Action

Investing.com - Gold prices traded slightly lower on Tuesday as escalation in trade tensions took a pause and Federal Reserve Chairman Jerome Powell only pledged that the U.S. central bank would “act as appropriate” in response to current developments.

At 11:08 AM ET (15:08 GMT), gold futures for August delivery on the Comex division of the New York Mercantile Exchange, fell $2.35, or 0.2%, to $1,325.55 a troy ounce.

Gold has rallied in the prior four consecutive sessions as U.S. President Donald Trump’s stood firm on plans to implement tariffs against China and Mexico as a policy tactic.

While analysts increasingly fear that escalating levies will lead to a global slowdown that could end in recession, the metal has benefited from its role as a safe-haven in times of political and economic troubles.

Convinced that the Federal Reserve will need to react with policy in order to support the U.S. economic expansion, markets have steadily increased the probability of interest rate cuts. Fed fund futures now price in three rate cuts by January of next year.

But Powell refrained from giving in to market perceptions in a speech delivered on Tuesday as he referred to recent developments regarding trade negotiations.

“We do not know how or when these issues will be resolved,” Powell insisted. “We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective.”

Lower interest rates would be positive for gold as they limit the opportunity cost of holding the non-yielding asset.

In other metals trading, silver futures fell 0.2% at $14.717 a troy ounce by 11:12 AM ET (15:12 GMT).

Palladium futures gained 1.7% at $1,336.80 an ounce, while sister metal platinum traded down 0.2% at $819.60.

In base metals, copper rose 0.5% to $2.664 a pound.

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