Gold edges lower as US dollar firms, but Fed turmoil limits losses

Gold prices edged lower on Wednesday (Aug 27), pressured by an uptick in the US dollar, although renewed concerns over the US central bank’s independence after US President Donald Trump’s threat to fire Federal Reserve governor Lisa Cook lent support to bullion.

Spot gold was down 0.2 per cent at US$3,386.19 per ounce, as at 0918 GMT, after hitting its highest level since Aug 11 on Tuesday.

US gold futures for December delivery edged 0.1 per cent higher to US$3,435.70.

The US dollar index rose 0.1 per cent against its rivals, making gold less attractive for other currency holders.

Trump said that he was removing Cook over alleged improprieties in obtaining mortgage loans, a step that could test the boundaries of presidential power over the US Fed.

In response, Cook said that Trump has no authority to fire her from the central bank, and she will not resign.

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Trump has been pushing the US central bank to cut rates and has repeatedly criticised Fed chair Jerome Powell for acting too slow.

Last week, Powell signalled a possible rate cut at the Fed’s meeting next month, citing increasing risks to the US labour market.

Markets are now pricing in an 87 per cent chance of a quarter-point rate cut at the Fed’s September 17 policy meeting, according to the CME FedWatch Tool.

Non-yielding gold typically performs well in a low-interest-rate environment.

Focus now shifts to the Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gauge, due on Friday, for more cues on US rate cut trajectory.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said that its holdings rose 0.15 per cent to 959.92 tonnes on Tuesday from 958.49 tonnes on Monday.

Elsewhere, spot silver was flat at US$38.59 per ounce, platinum gained 0.3 per cent to US$1,353.11 and palladium climbed 0.8 per cent to US$1,102.50. REUTERS