Gold Nears Record as Traders Weigh US Data, Fed Future

Gold bars. Photographer: Alessia Pierdomenico/Bloomberg

(Bloomberg) -- Gold advanced as traders weighed US economic data and the Federal Reserve’s future, with legal fights escalating over President Donald Trump’s move to fire governor Lisa Cook.

Cook’s emergency hearing is in session in Washington, with a judge weighing whether to issue an order allowing her to continue her duties. Trump’s unprecedented attempt to fire Cook further throws into question the Fed’s independence, a cornerstone for the financial markets in terms of managing inflation and economic growth. The Fed’s interest-rate policies often sets the tone of the market for gold.

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“Another layer of geopolitical uncertainty related to risks around the Fed and overall institutional independence is moving flows into gold,” said Frank Monkam, head of macro trading at Buffalo Bayou Commodities. Expectations for more bullion buying from central banks in September also supported the market, he said.

Bullion is the go-to haven asset amid political and economic turmoil, and it typically benefits from a lower-rate environment. Prices rose as much as 0.9% to $3,446.27 an ounce on Friday, not far from an all-time high of $3,500.10 hit in April.

Meanwhile, US data on Friday showed stubborn inflation, and the Fed’s favored price index remained well above policymakers’ comfort zone. Still, US consumer spending rose in July by the most in four months, indicating resilient demand. Traders have continued betting on high odds of a September cut for US interest rates.

Spot gold was up 0.8% at $3,444.94 an ounce as of 11:24 a.m. in New York. The Bloomberg Dollar Spot Index was was little changed. Silver rose, while platinum and palladium declined.

--With assistance from Jack Ryan and Sybilla Gross.

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