Gold Advances With Hassett Emerging as Fed Chair Frontrunner

Central Bank

Commodity

Summary:

The dollar and bond yields pushed lower after the report, helping lift bullion by as much as 0.5%. Gold typically benefits in a lower-rate environment as it pays no interest.

Gold advanced after a report that White House National Economic Council Director Kevin Hassett is seen by advisers and allies of US President Donald Trump as the frontrunner to be the next Federal Reserve chair.

With Hassett, Trump would have a close ally at the independent central bank, according to people familiar with the matter, Bloomberg reported Tuesday. Hassett is seen as someone who would bring the president’s approach to interest-rate cutting to the Fed, which Trump has long wanted to control, some of the people said.

The dollar and bond yields pushed lower after the report, helping lift bullion by as much as 0.5%. Gold typically benefits in a lower-rate environment as it pays no interest.

The precious metal slipped earlier as traders assessed the prospects of a peace deal between Ukraine and Russia, and the Federal Reserve’s interest-rate outlook following fresh economic data that was delayed due to the US government shutdown.

ABC News reported Ukrainian officials had agreed to a plan to end the war. The US is holding discussions with Russian officials in Abu Dhabi about a possible deal, and Ukraine’s military intelligence chief also is attending meetings.

In the days since White House Special Envoy Steve Witkoff and Russian counterpart Kirill Dmitriev hammered out a peace proposal, Ukrainian and European officials hurried to draft a counteroffer that would provide far less favorable terms to Russia. The result is a winnowed-down 19-point plan, according to people familiar with the matter. Russian officials have called it a nonstarter.

Meanwhile, US government data showed retail sales rose modestly in September while wholesale inflation picked up, reflecting higher energy and food costs.

Initial declines in equity markets also weighed on gold as some investors unwound bullion positions to cover losses. US stocks climbed after the tech sector trimmed the sharp decline it suffered earlier in the session.

“A potential peace deal may reduce the geopolitical risk premium and may trigger some profit-taking,” said Ole Hansen, head of commodity strategy at Saxo Bank. Stock market jitters initially sparked some selling in gold but the negative impact was limited, he added.

Traders are focusing on the prospects for lower interest rates in the world’s biggest economy as well as signs of stress in the money market. That may underpin gold prices given the potential risk of fresh quantitative easing, Hansen said.

Gold has consolidated after pulling back last month from a record peak above $4,380 an ounce, with some investors fearing the rally had gone too far, too fast. Still, the metal has gained about 55% this year and is on track for its best annual performance since 1979, supported by elevated central-bank purchases and inflows to exchange-traded funds.

Gold was 0.4% higher at $4,152.64 an ounce as of 12:33 p.m. in New York. The Bloomberg Dollar Spot Index fell 0.4%. Silver, platinum and palladium all gained.

Source: Bloomberg

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Gold Advances With Hassett Emerging as Fed Chair Frontrunner

Source: Bloomberg

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