Investing.com – Gold prices slid lower on Wednesday in Asia as U.S. Federal Reserve Chairman Jerome Powell played down expectations for an aggressive rate cut.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell 0.1% to $1,411.95 a troy ounce by 1:32 AM ET (05:32 GMT).
Overnight, Powell said the Fed is studying whether the ongoing Sino-U.S. trade war and slowing economic growth warrants a rate cut. But he emphasized that politics won’t be a consideration in its decision.
“The Fed is insulated from short-term political pressures – what is often referred to as our ‘independence,’” Powell added.
His remarks led to a selloff in gold, as expectations of lower interest rates make safe-haven assets such as gold, which does not yield interest, more attractive while weighing on the U.S. dollar.
Separately, St. Louis Fed President James Bullard told Bloomberg in an interview that he does not think the U.S. economy is bad enough to warrant a 50-basis-point cut in July.
In the past, U.S. President Donald Trump has openly pressured Powell and his colleagues to loosen policy, saying lower rates would give an added boost to an economy.
Gold hit six-year highs earlier this week, buoyed by increased expectations of a rate cut after the Fed indicated at its latest meeting that it could cut interest rates, possibly as soon as next month, to offset the effects of slowing global growth as a result of trade tensions and subdued inflation.
For the rest of the week, traders will likely turn their attention to the upcoming G-20 summit in Japan, where Trump will meet with his Chinese counter Xi Jinping to discuss trade-related issues.