Gold Wavers as Traders Assess Fed Rate Outlook, Geopolitics

GC=F -0.44% DX-Y.NYB +0.10%

(Bloomberg) -- Gold closed little changed as prospects for a Fed rate cut countered easing geopolitical risk.

The dollar and bond yields pushed lower — lifting bullion — after a Bloomberg 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. 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, according to people familiar with the matter.

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Earlier in the session, the precious metal slipped after 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.

“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.

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.

Traders are now 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 was 0.1% lower at $4,130.70 an ounce as of 4:21 p.m. in New York. The Bloomberg Dollar Spot Index fell 0.3%. Silver, platinum and palladium all gained.

--With assistance from Jack Ryan, Yihui Xie and Preeti Soni.

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