Gold holds gain after Warsh remarks ease Fed rate-hike prospects

[SINGAPORE] Gold held a rebound after a speech by US Federal Reserve chairman Kevin Warsh dampened speculation the central bank may hike interest rates this year to tackle inflation.

Bullion was trading around US$4,050 an ounce after closing up 0.6 per cent on Wednesday (Jul 1), snapping two days of declines. Warsh’s less-hawkish-than-feared comments to the European Central Bank forum in Portugal on Wednesday eased concerns about the Fed’s next moves after the Middle East war pushed up energy prices and inflation indicators. Higher borrowing costs are a headwind for non-yielding metals.

Warsh also doubled down on a message from his first press conference as Fed chairman last month that the central bank will deliver price stability, and repeated his determination to bring inflation back to its 2 per cent target.

Latest data paints a mixed picture of the US economy. Manufacturing activity expanded for a sixth straight month in June but at a slower pace. Meanwhile, private-sector job creation was solid again in June, capping the best three-month stretch for hiring in more than a year. Payrolls data due Thursday will provide further clues.

Spot gold was 0.3 per cent higher at US$4,053.57 an ounce as of 8.15 am in Singapore. Silver rose 0.4 per cent to US$59.35 an ounce. Platinum edged higher while palladium was up 0.4 per cent. The Bloomberg US dollar Spot Index, a gauge of the US currency, was little changed. BLOOMBERG