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.
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
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.
This article was originally posted on FX Empire
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