Gold Benefits as Dollar Weakens on Fed Pick

By David Hodari Features Dow Jones Newswires

Gold prices rose Thursday, with the dollar slipping on expectations regarding President Donald Trump's nominee to lead the Federal Reserve.

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The precious metal gained 0.13% to $1,276.04 a troy ounce in midmorning trade.

Copper, meanwhile, fell 0.66% to $6,882 a metric ton, joining its base metals peers and the remaining precious metals in falling, with profit-taking following broad-based commodities gains on Wednesday.

The WSJ Dollar Index, which measure the U.S. currency against a basket of 16 others, fell 0.13% to 87.63. A weaker greenback makes dollar-denominated commodities less expensive for holders of other currencies.

That currency move came after the White House notified Federal Reserve Governor Jerome Powell that Mr. Trump intends to nominate him as the next chairman of the central bank.

The news offset a Federal Reserve policy statement which prepared the ground for an interest-rate increase in December. CME Group data last showed a rate-increase scenario as fully priced in.

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"On the whole, Powell would be slightly dovish for the dollar, although I can't see him doing anything that Janet Yellen wouldn't do," said David Govett, the head of precious metals at Marex Spectron. "If an interest hike were likely beforehand, it will still be likely."

Mr. Powell is seen by investors as more dovish than the other recent front-runner, economics professor John Taylor. "A choice in favor of Taylor would probably result in a significant [gold] price correction," Commerzbank said in a note.

In addition to the expected announcement of Mr. Trump's Fed pick, investors were readying themselves for an action-packed Thursday, with the Bank of England widely expected to raise rates for the first time in more than a decade. In the U.S., House Republican leaders were pushing to release their tax plan, and nonfarm payrolls numbers are expected Friday.

Among precious metals, silver was down 1.47% at $17.07 a troy ounce, palladium fell 0.82% to $996.60 a troy ounce and platinum fell 0.35% to $930.20 a troy ounce.

Among base metals, zinc fell 0.91% to $3,210.50 a metric ton, aluminum fell 0.39% to $2,166 a metric ton, tin fell 0.01% to $19,400 a metric ton, nickel fell 0.59% to $12,620 a metric ton and lead fell 0.73% to $2,457 a metric ton.

Write to David Hodari at david.hodari@wsj.com

Gold prices inched higher Thursday, boosted by a weaker dollar with investors awaiting announcements out of Washington and Friday's jobs report.

Gold for December delivery swung between small gains and losses closed up 0.1% at $1,278.10 a troy ounce on the Comex division of the New York Mercantile Exchange. Price moves have been muted in recent sessions, with some analysts noting that changes to the Federal Reserve's outlook or sustained moves in the dollar could give the market more direction.

On Wednesday, the Fed left rates unchanged but suggested it remained on course to lift them before year's end amid signs the economy is gaining momentum. Additionally, The Wall Street Journal reported that the White House has informed Fed governor Jerome Powell that President Donald Trump intends to nominate him as the next chairman of the central bank. A formal announcement is expected later Thursday.

Because gold struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise, the central bank's outlook for rate increases has affected the outlook for gold throughout the year. Some investors and analysts have said they think Mr. Powell will continue the Fed's pattern of gradually raising rates, a positive for gold moving forward because more hawkish candidates have been under consideration.

The gold market was pausing ahead of the formal announcement and Friday's jobs report, said Jim Wyckoff, senior analyst at Kitco Metals, to see how the central bank's actions might change moving forward. A December rate increase is widely increased, but changes to the Fed's future plans because of weak inflation could support gold, Mr. Wyckoff said.

"I think [a December rate increase] is pretty much baked into the cake, but beyond that, what's the pace? Maybe this jobs report gives a clue to that," Mr. Wyckoff said.

Investors were also paying close attention to the dollar's moves, as gold and other dollar-denominated metals become cheaper to foreign buyers when the U.S. currency falls. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, was recently down less than 0.1%.

The dollar inched lower after the Journal reported that the Republican tax plan, scheduled to be officially released later in the day, aims to permanently chop the corporate tax rate from 35% to 20%, compress the number of individual income tax brackets and repeal the taxes paid by large estates starting in 2024.

Among base metals, copper for December delivery closed up less than 0.1% at $3.1435 a pound. The industrial metal sits near three-year highs, buoyed by a positive global economic backdrop, strong demand from China and the prospect that electric vehicles will stoke demand for base metals moving forward.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

November 02, 2017 14:15 ET (18:15 GMT)