Gold nears $2,300 after Powell says Fed has time before rate cut

Gold rose to another record after Federal Reserve Chair Jerome Powell signaled policymakers will wait for clearer signs of lower inflation before cutting interest rates.

Powell said recent inflation figures – though higher than expected – didn’t “materially change” the overall picture, according to the text of a speech at Stanford University in California. He reiterated his expectation that it will likely be appropriate to begin lowering rates “at some point this year.”

Treasury yields and the dollar pushed lower, boosting bullion by as much as 0.6% to a record high of $2,295.25 an ounce. The precious metal has risen more than 10% this year, setting a series of records along the way on expectations that lower U.S. interest rates are on the horizon.

While Powell reiterated the Fed’s wait-and-see approach before lowering borrowing costs, the U.S. central bank’s path to cut rates is unchanged despite recent inflation figures. That’s “very gold positive as it suggests that the Fed will cut significantly before the inflation target is reached,” said Bart Melek, global head of commodity strategy at TD Securities. Lower rates are generally positive for bullion as it pays no interest.

Bullion was up 0.4% to $2,290.16 an ounce at 1:07 p.m. in New York.