Gold futures prices rose nearly 1% to a record high of $4,209 per ounce at 7:15 a.m. Saudi time, as the upward trend continues unabated.
The rally comes after US President Donald Trump renewed his threat to impose restrictions on cooking oil exports to China, threatening to halt the purchase of any US soybeans. Yesterday, the US market, with the S&P 500 Index, wiped out $450 billion in value in a matter of seconds following the US president's remarks.
The statements come as the latest chapter in Trump's recent escalation against China following the latter's imposition of restrictions on rare metal exports.
Latest Federal Reserve statements
At the top of the list is Federal Reserve Chairman Jerome Powell, who spoke about monetary policy easing and highlighted the weakness in the US labor market and the renewed threat of inflation. These statements are directly beneficial to gold trading.
The Federal Reserve is likely to deliver its second interest rate cut this year when it meets later this month, JPMorgan Chase & Co. said in a note, after Fed Chairman Jerome Powell pointed to the weakness in the labor market and the economic risks of the Fed moving too slowly to ease monetary policy.
In a speech at an economic conference in Philadelphia on Tuesday, Powell said the labor market showed significant downside risks. Both labor supply and demand have declined very sharply.
The Fed said it plans to stop shrinking its balance sheet when reserves are somewhat above the level consistent with ample reserve conditions, Powell said, adding that this point is approaching.
We may approach that point in the coming months, and we are closely monitoring a wide range of indicators to inform that decision, Powell added.
Powell's recent comments have reinforced expectations for further interest rate cuts, starting at its next meeting on October 28-29, JPMorgan Chase & Co. said in a note Tuesday.
While there was little doubt that the Federal Reserve was leaning toward cutting interest rates at its next meeting, today's comments were a strong confirmation of that expectation, the bank added.
There are also statements by Michelle Bowman, Vice Chair of the US Federal Reserve for Supervision, who sees the possibility of two interest rate cuts in 2025.
Last August, Bowman called for three additional interest rate cuts during 2025, stressing that monetary policy must remain flexible in the face of accelerating economic developments. Since then, the US Federal Reserve cut its key interest rate by 25 basis points in September, a move welcomed by markets as a first sign of a new monetary easing cycle.
Boston Federal Reserve President Susan Collins expressed support for additional interest rate cuts this year, citing increased risks to the labor market amid a more contained outlook on inflation.
Collins said during an event in Boston on Tuesday that it would be prudent to further normalize monetary policy this year to support the labor market under current economic conditions.
Collins emphasized that even with further interest rate cuts, monetary policy will remain slightly restrictive, which she considers appropriate to ensure that inflation resumes its decline once the effects of tariffs ripple through the economy.
Despite her support for easing, Collins stressed that policy is not predetermined. She said, I can envision scenarios where appropriate policy requires holding interest rates steady later this year and into next year, as we assess the effects of recent policy actions and gain more information.
