Gold prices fall on dollar strength as Powell signals cautious rate-cut approach

Investing.com -- Gold prices drifted lower Thursday, falling near to a two-month low, as the dollar strengthened after Federal Reserve chairman Jerome Powell signaled that the Fed could take a careful approach to further rate cuts. 

At 12:00 ET (17:00 GMT), spot gold fell 0.2% to $2,564.66 an ounce, while gold futures expiring in December slid 0.6% to $2,570.60 an ounce. Spot gold was nursing an over 8% slide from a record high hit in October. Gold pressured by Powell, inflation data   

Losses in the yellow metal came tracking a sharp rise in the dollar and Treasury yields this week. The dollar’s rally intensified after data on Wednesday showed U.S. consumer price index inflation remained sticky in October.

This was backed up Thursday by data showing that US producer prices increased at a faster annual rate than anticipated in October, rising by 2.4% compared to a year ago, up from 1.9% in September and above economists' estimates of 2.3%.

As well as economic data, remarks from Powell also helped boost the dollar and weigh on gold. 

"The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully," Powell said in a prepared remarks Thursday. 

Other precious metals were mixed on Thursday. Platinum futures rose 0.1% to $944.30 an ounce, while silver futures fell 0.4% to $30.538 an ounce.  Copper remains near three-month low on China woes 

Among industrial metals, copper prices were mixed after hitting a three-month low.

Benchmark copper futures on the London Metal Exchange rose 0.2% to $9,030.00 a ton, while December copper futures fell 0.1% to $4.0785 a pound, with both contracts reaching their weakest levels since August. 

China’s recent round of fiscal measures largely underwhelmed traders hoping for more targeted measures to support private spending and the property market. The prospect of higher trade tariffs under Trump also dented China’s outlook.

Beijing is expected to outline more stimulus measures during two key political meetings in December.

Focus this week is on Chinese industrial production and retail sales data, due on Friday, for more cues on the economy.

(Ambar Warrick contributed to this article.)

Source: Investing.com