Gold price rallies on US Fed rate cut hopes

Gold futures on the COMEX division of the New York Mercantile Exchange rose significantly on Wednesday as US Federal Reserve Chairman Jerome Powell`s testimony boosted hopes for interest-rate cuts. In prepared remarks to Congress, Powell said that crosscurrents such as trade tensions and concerns about global growth continue to weigh on the US economic activity and outlook, the Xinhua news agency reported.

He said that many Fed policymakers "saw that the case for a somewhat more accommodative monetary policy had strengthened." Powell`s remarks were perceived as dovish by many market participants and fueled expectations for interest cuts.

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As a result, the US dollar index, a gauge of the greenback against a basket of other major currencies, fell 0.4 per cent to 97.10 shortly before the settlement of gold futures.

When the dollar weakens, gold futures will rise as gold, priced in the dollar, becomes less expensive for investors holding other currencies.

The most active gold contract for August delivery went up 12.00 dollars, or 0.86 percent, to close at 1,412.50 dollars per ounce.

The bullion rose further during the ensuing electronic trading.

As for other precious metals, silver for September delivery was up 7.9 cents, or 0.52 per cent to close at 15.226 dollars per ounce. Platinum for October delivery was up 14.90 dollars, or 1.83 per cent, to settle at 830.00 dollars per ounce.