PRECIOUS-Gold soars 2% after Powell speech, Trump tweets

Reuters

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    * Gold setting up for 4th straight week of gains
    * Powell says Fed will "act as appropriate"
    * Trump orders U.S. companies to look at closing China
operations
    * Palladium on track for third weekly gain
    * Dollar, stock markets slide

 (Updates prices)
    By Sumita Layek and Arpan Varghese
    Aug 23 (Reuters) - Gold surged 2% on Friday as investors
interpreted U.S. Federal Reserve Chair Jerome Powell's speech as
leaning toward a dovish monetary policy stance and President
Donald Trump's latest comments exacerbated trade tensions with
China.
    Spot gold  XAU=  rose 1.9% at $1,526.60 an ounce by 14:08 pm
EDT (1801 GMT), shaking off slight headwinds ahead of the Fed
Chair's speech.
    Prices earlier rose to $1,528.79, the highest since Aug. 13,
when spot gold had scaled a six-year peak of $1,534.31.
    U.S. gold futures  GCcv1  settled up 1.9% to $1,537.60.
    "The fact that he (Powell) said that they (the Fed) will act
appropriately to sustain expansion is pretty bullish for gold.
The two primary tools they have are quantitative easing (QE) or
lower rates - both those tools will cause gold to go higher,"
said Bob Haberkorn, senior market strategist at RJO Futures.
    "The move this morning is just more people buying gold
simply with the expectations that interest rates will be lower
by year-end."
    Powell said the U.S. economy is in a "favorable place," but
gave few clues about interest rate cuts at its next meeting.
However, he listed a series of economic and geopolitical risks
the Fed is monitoring, noting these were linked to the trade
spat.  urn:newsml:reuters.com:*:nN9N23A02K
    "We shouldn't be surprised if we see the Fed deliver a full
percentage point in rate cuts over the next 12 months and a new
QE program as we may only need a couple of the following macro
events to blow up: trade uncertainties, weakness in China and
Germany, Brexit, Hong Kong, and the dissolution of the Italian
government," Edward Moya, a senior market analyst at OANDA, said
in a note.
    Powell's speech prompted a backlash from Trump on Twitter,
asking whether the Fed chair was a greater "enemy" than China's
leader Xi Jinping.
    Trump also ratcheted up the rhetoric on China, ordering U.S.
companies to look at ways to close operations in the country,
which sent equities tumbling and drove further inflows into
safe-haven gold.  urn:newsml:reuters.com:*:nL2N25J0XP  .N   US/     
    This came after China unveiled retaliatory tariffs against
about $75 billion worth of U.S. goods.  urn:newsml:reuters.com:*:nL4N25J301    
    "This means there is no resolution, the escalation
continues. Investors are selling the risk and buying gold," said
SP Angel analyst Sergey Raevskiy.
    Gold has risen nearly 8% so far this month and about 19%
this year, and was set for a fourth straight week of gains.
    Elsewhere, silver  XAG=  gained 2.3% to $17.39 an ounce,
while platinum  XPT=  was up 0.1% at $858.11.
    Palladium  XPD=  fell 1.7% to $1,461.83 an ounce, but the
auto catalyst metal remained on track for a third straight
weekly gain of about 0.9%.   

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Gold outpaces palladium    https://tmsnrt.rs/2Z6zOuW
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 (Reporting by Sumita Layek and Arpan Varghese in Bengaluru
Editing by Chris Reese and Tom Brown)
 ((Sumita.Layek@thomsonreuters.com; Within U.S. +1 651 848 5832,
Outside U.S. +91 8067491638; Reuters Messaging:
Sumita.Layek.thomsonreuters.com@reuters.net))

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