Investing.com – Gold prices rose on Thursday morning in Asia as the U.S. dollar weakened on investors’ expectations of a slowdown in interest rate hikes.
The chairman of the U.S. Federal Reserve, Jerome Powell, said Wednesday that rates are “just below” the neutral level now.
Gold Futures for February delivery climbed 0.2% to $1,229.8 per troy ounce by 11:30PM ET (03:30 GMT), regaining some ground after closing at a two-week low on Wednesday.
“Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy – that is, neither speeding up nor slowing down growth,” said Powell on Wednesday.
Powell’s comments helped drive the US dollar down. The U.S. dollar index, which tracks the greenback against a basket of six major currencies, fell 0.01% to 96.68.
“The USD will be knocked off its upward trajectory due to a flat yield curve, low rates relative to other G10 countries on a hedged basis, and as the Fed is likely to be less aggressive at a time when other central banks begin to really normalize their policies,” Bart Melek, head of commodity strategy at TD Securities, told Bloomberg.
“The path of the USD is important, as it has been the key factor weighing on the yellow metal this year.”
The minutes from the Fed’s Nov. 7-8 meeting are due to be released on Thursday and are expected to offer clues about the central bank’s policy direction next year.
Investors are also looking forward to the G20 summit Friday and Saturday in Argentina, in which U.S. President Donald Trump and his counterpart Xi Jinping are set to discuss trade.
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