Gold prices steady near record highs; economic data in spotlight

Investing.com -- Gold prices steadied Wednesday, remaining close to recent record highs as overnight comments from U.S. Federal Reserve Chair Jerome Powell sparked heightened caution over growth, inflation, and interest rates. 

At 08:45 ET (12:45 GMT), Spot gold rose 0.1% to $3,766.50 an ounce, while gold futures fell 0.4% to $3,799.75/oz. 

Gold and other precious metals benefited from increased haven demand, while sustained weakness in the dollar also kept metals mostly well-bid. Anticipation of more key economic readings this week also kept markets cautious, as did weak U.S. purchasing managers index data. 

Fed’s Powell flags economic risks

Spot gold hit a record high of $3,791.1/oz on Tuesday, and remained close to the level after a strong run-up over the past week. 

Fed Chair Powell on Tuesday evening flagged increased uncertainty over the U.S. economy, stating that there was no “risk-free path” towards cutting interest rates while curbing inflation and maintaining jobs growth. 

While Powell did note that the labor market had weakened sharply in recent months, he also noted that inflation remained sticky, complicating the central bank’s plans to cut interest rates. 

Powell’s comments came just a week after the Fed cut interest rates by 25 basis points as expected, and flagged plans to further ease policy. Gold had risen sharply after the move, given that lower rates also make non-yielding assets such as metals appear more attractive. 

Markets were seen largely maintaining bets on at least two more 25 bps cuts this year, CME Fedwatch showed.

More signs of U.S. economic weakness could push the Fed into even more monetary easing, with the dollar remaining close to recent three-year lows. PMI data for September showed both manufacturing and services activity grew less than expected, as local businesses grapple with higher trade tariffs, sticky inflation, and sluggish consumer spending. 

Elsewhere, with spot platinum down 1.3% to $1,487.25/oz, while spot silver fell 0.6% to $44.338/oz. 

Among industrial metals, benchmark copper futures on the London Metal Exchange rose 1.2% to $10,113.00 a ton, while COMEX copper futures rose 1% to $4.6915 a pound. 

U.S. GDP, inflation data on tap this week

More key U.S. economic prints are due in the coming days, with a final reading on second-quarter gross domestic product growth due on Thursday. The print is expected to confirm that the U.S. economy grew faster than expected in the June quarter.

More closely watched will be PCE price index data– the Fed’s preferred inflation gauge, which is due on Friday. The print is expected to show inflation remaining sticky in August, potentially sparking more uncertainty over the Fed;s plan for interest rates. 

Several Fed officials are also set to speak in the coming days. 

Ambar Warrick contributed to this article