Investing.com – Gold prices were set to snap a six-week losing streak Friday after a plunge in the dollar supported a broad-based rally in metals following a dovish speech from Fed Chairman Jerome Powell.
Gold futures on the Comex division of the New York Mercantile Exchange rose by $18.70, or 1.57%, to $1,212.80 a troy ounce.
Federal Reserve Chairman Jerome Powell all but dismissed any notion that the Federal Reserve would step up the pace of rate hikes, insisting that the current pace of gradual rate hikes were appropriate as there were no "clear signs" of an elevated risk of the economy overheating.
“I see the current path of gradually raising interest rates as the [Federal Open Market Committee’s] approach to taking seriously both of these risks.” Powell said in speech at Jackson Hole, Wyo.
That prompted a sharp retreat in the dollar as investors reined in some of their bullish bets on continued upside in the greenback, sending gold prices soaring.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.52% to 95.05.
Dollar-denominated assets such as gold are sensitive to moves in the dollar. A fall in the dollar makes gold cheaper for holders of foreign currency and raises demand.
The dollar was also knocked by ongoing political uncertainty in Washington as traders assess the impact of President Donald Trump's growing legal concerns after his former lawyer Michael Cohen implicated him in crimes.
The plunging dollar helped to overshadow concerns over the U.S.-China trade war after talks this week led to little progress, though this outcome was widely expected.
Copper prices rose 1.45% to $2.69, while zinc prices rose 2.72% at 2,532.75.
Aluminium prices rose 0.92% to 2,093.00, while nickel futures gained 1.44% to 13,430.00.
Silver futures rose 1.64% to $14.78 a troy ounce, while platinum futures rose 1.39% to $789.30.