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Gold Prices Pull Back from $1,400 Ahead of Powell Testimony

Investing.com - Gold prices pulled away from the psychological $1,400 level ahead of Federal Reserve Chairman Jerome Powell’s semiannual monetary policy report to Congress.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, fell $2.45, or 0.2%, to $1,398.15 a troy ounce by 7:33 AM ET (11:33 GMT).

“Powell’s testimony is expected to be perused word-for-word by gold traders looking for clues on how the Fed chief will be voting at this month’s Federal Open Market Committee meeting,” Investing.com senior commodity analyst Barani Krishnan said.

Markets are still pricing in a 25 basis point reduction to interest rates at the July 30-31 meeting but expectations for more aggressive easing have been scaled back since last Friday’s strong jobs report.

Fed fund futures no longer see the possibility of a 50 basis point cut at the end of July and now even place a 4% probability on the central bank keeping interest rates unchanged.

Krishnan pointed to Powell’s recent remarks that “an ounce of prevention is worth more than a pound of cure”, and said they could be “a hint that the central bank might lean toward a so-called insurance cut to head off a potential economic slowdown.”

“Yet, if history is a guide, then the Fed has always been known to err on the side of caution—meaning it might withhold the minimum 25 basis points cut the market expects in July, just to see how U.S. jobs perform this month.”

Krishnan also recommended keeping an eye on the FOMC’s release of its June meeting minutes at 2:00 PM ET (18:00 GMT), saying that it could be the other major driver for gold on Wednesday

“This will spell out more clearly what prompted the committee’s members to vote the way they did when they decided to hold rates last month,” he explained.

In other metals trading, silver futures slipped 0.2% to $15.123 a troy ounce by 7:34 AM ET (11:34 GMT).

Palladium futures gained 0.6% to $1,549.00 an ounce, while sister metal platinum rose 0.5% to $818.80.

In base metals, copper traded up 1.2% to $2.657 a pound.

$1,400

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