Gold and Metals Rally as Fed’s Powell Hints a Rate Cut in July

Gold and all metals are focused on Federal Reserve’s chairman Jerome Powell testimony before the US Congress. Also, what he is saying regarding the United States economy.
Mauricio Carrillo
Gold and Metals Rally as Fed's Powell Hints a Rate Cut in July
Gold and Metals Rally as Fed’s Powell Hints a Rate Cut in July

Gold is trading positive on Wednesday as investors are digesting Fed’s Jerome Powell testimony in front of the Congress. Dollar index is down as the chairman hinted a rate cut in July.

Silver and Platinum are trading positive. Copper has finally found support, and it is rallying after four negative sessions; the same with palladium, which is building a new positive leg.

All metals are focused on Federal Reserve’s chairman Jerome Powell testimony before the US Congress. Also, what he is saying regarding the United States economy.

Markets are also checking any hint Powell will give regarding possible rate cuts in July’s FOMC meeting.

Jerome Powell before the Congress

Fed’s char Powell is starting today his two-day testimony in front of the House Financial Services Committee.

In his initial remarks, he said that the Fed will act as appropriated to sustain economic expansion. According to Powell, “since June, uncertainty continues to weigh on the outlook.”

Key aspect such as uncertainty over trade, global growth, and slowness in business investments are weighing on the outlook. Besides, “Crosscurrents have reemerged.”

Nevertheless, the baseline is still a solid economic growth with an economy performing “reasonably well,” and inflation expected to move back to the 2% objective over time.

Long story short, Jerome Powell seems to be hinting that the Fed will cut rates in July as the Fed will “act as appropriate” to sustain economic growth.

Dollar index down amid Powell testimony

In this framework, the dollar index is reacting to the downside as investors are accepting that the Federal Reserve will finally cut rates this month.

According to the CME Fedwatch tool, the odds for a 25 basis point cut in July are now 99.3%. So it is highly assumed. The difference is that another 25 basis points cut is around 60% expected in September.

FedWatch expectations for July 31
FedWatch expectations for September 18

Back to the dollar index, DXY is now falling over 0.30% on the day as it is heading to the 97.00 area. It is pushing gold to the upside.

Gold jumps above 1,400 as dollar goes down on Powell remarks

XAUUSD daily chart July 10

Gold is trading positive on Wednesday as investors are digesting Jerome Powell hints for a rate cut in July and a dollar on sale.

Currently, XAU/USD is trading around 0.90% positive on the day as the unit broke above the 1,400 area and it is testing the 1,410 level, highs since July 5.

To the upside, next resistance is at 1,420 and then 1,440. Technical studies are suggesting a U-turn to the upside and a short term rally to test current highs.

Metals report for July 10

Silver is trading positive for the third day with acceleration on Wednesday following Powell remarks. Currently, it is 1.0% positive at 15.28.

Copper finally found support at 2.6090 on Tuesday, and it is extending recovery on Wednesday to rally around 2.0% and to trade above 2.6800.

Palladium is rallying on Wednesday amid Fed’s chairman commentaries. On Tuesday, XPD/USD fell to trade at its lowest level since July 1 at 1,540, but today it jumped to highs since March 22 at 1,585. More to come.

Platinum is also rallying on Wednesday as the unit finally broke above the range at 817.10 and it is trading at 825.50.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.