Gold prices slip lower as Trump downplays Powell threat; needs new catalyst

Investing.com-- Gold prices fell Thursday amid some improvement in risk appetite after U.S. President Donald Trump downplayed fears that he will prematurely fire Fed Chair Jerome Powell.

At 09:20 ET (13:20 GMT), spot gold fell 0.9% to $3,318.65 an ounce and gold futures for September fell 1.1% to $3,323.50/oz. 

Gold needs fresh catalyst - ING 

Trump on Wednesday said it was “highly unlikely” he would fire Fed Chair Powell, although it still remained a possibility if there was evidence of fraud in the Fed’s ongoing renovation project. 

Concerns over Powell’s firing were fueled by Trump ramping up his attacks on the Fed Chair, while several members of Trump’s Republican allies were also seen calling for Powell’s immediate removal.

Trump claimed that Powell has been too late in cutting U.S. interest rates, demanding that he do so immediately to prevent economic damage. Powell and several Fed policymakers, on the other hand, have signaled that interest rates will remain unchanged until the inflationary impact of Trump’s tariffs becomes clear.

Still, Trump’s downplaying of his crusade against Powell helped marginally improve market sentiment, which in turn sapped some near-term demand for gold and boosted U.S. equities. 

Gold prices are up around 28% so far this year with the global trade war, geopolitical risks and central bank buying the key drivers for the precious metal’s rally.

However, "since reaching a record high above $3,500/oz in April, the gold rally has stalled, and is need of a fresh catalyst to help push it higher," said analysts at ING.

Retail sales rebounded in June

U.S. retail sales grew by more than anticipated in June, rebounding from two months of decline, rising 0.6% month-over-month, reversing a 0.9% drop in May, according to data from the U.S. Commerce Department’s Census Bureau.

In separate releases on Thursday, the Philadelphia Fed Manufacturing Index, an indicator of activity in the mid-Atlantic region and a possible signpost of the nationwide health of the manufacturing sector, returned to positive territory and a measure of first-time claims for unemployment insurance dipped slightly to 221,000.

The Fed is widely expected to leave rates unchanged later this month, especially as consumer and producer inflation data released this week showed prices remaining sticky in June. 

This notion supported the dollar, keeping it near three-week highs after the greenback logged steady gains over the past week. 

Among broader metal prices, spot platinum rose marginally to $1,435.05/oz, having closed above $1,400/oz on Wednesday, which ANZ analysts said could herald more strength.

Spot silver slipped 0.3% to $38.005/oz. 

Benchmark copper futures on the London Metal Exchange were down 0.1% to $9,622.50 a ton, while U.S. COMEX copper futures fell 0.9% to $5.4785 a pound.

Ambar Warrick contributed to this article

Broader metal prices were also subdued amid pressure from a stronger dollar, which steadied near a three-week high following sticky inflation data for June.

But haven demand for gold remained upbeat, especially amid growing uncertainty over Trump’s tariffs, which are set to take effect in just over two weeks. 

Platinum and silver also largely maintained their outperformance over gold.