Investing.com - Gold prices rose on Wednesday after U.S. President Donald Trump announced two nominations for the Federal Reserve, stoking hopes that the U.S. central bank would move forward with more policy easing.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, rose $5.45, or 1.1%, to $1,423.45 a troy ounce by 7:45 AM ET (11:45 GMT).
Trump announced via Twitter that he intends to nominate Christopher Waller and Judy Shelton to vacant posts at the Fed.
Most of the headlines have focused on Shelton, the U.S. director of the European Bank for Reconstruction and Development and former economic adviser during Trump’s 2016 campaign, as she told CNBC last month that, if appointed, said she would lowest interest rates to zero within two years.
The interview mirrored recent calls from Trump for the Fed to cut rates. Lower rates favor non-yielding bullion.
Markets are pricing in a quarter-point reduction at the Fed’s July 30-31 meeting.
Adding to dovish expectation, Waller currently serves as the executive vice president at the Federal Reserve Bank of St. Louis. The head of that regional bank, James Bullard, was the only policymaker to vote against the last Fed decision to hold rates steady, preferring to lower rates by a quarter point.
Increasing expectations for policy easing was not limited to the U.S. either as Christine Lagarde was nominated to replace Mario Draghi at the head of the European Central Bank.
“Christine Lagarde's appointment to head the ECB means Draghi's policy incursions will endure -- at a minimum,” David Rosenberg, chief economist at Gluskin Sheff, said in a tweet. “Euro should be sold and rates headed even lower if that's at all possible.”
Analysts suggested that gold could return to its bullish run after the recent correction that took it briefly below $1,400. A trade truce between the U.S. and China at the G20 summit was cited for the return of risk appetite, denting demand for safe-haven gold.
“As investor optimism over the U.S.-China trade truce continues to wane, gold prices could at least stay elevated in the short term, especially considering the persistent Trump protectionist policy as the U.S. president threatens new tariffs on EU goods,” Helen Rush, senior analyst at Capital Markets, said in commentary published Wednesday.
“Against this backdrop, the yellow metal will likely remain bullish in general, though there is a risk of a correction in the near term as gold looks attractive for profit-taking at current levels.”
Ole Hansen, head of commodity strategy at Saxo Bank, repeated his call at the beginning of the week that the G20 reaction in gold was false.
“The correction reversed after it touched $1,380 with a break above $1,440 now signaling an extension to $1484,” he tweeted on Wednesday.
In other metals trading, silver futures rose 0.2% to $15.273 a troy ounce by 7:47 AM ET (11:47 GMT).
Palladium futures dipped 0.2% to $1,550.35 an ounce, while sister metal platinum gained 0.4% to $836.65.
In base metals, copper dropped 0.2% to $2.660 a pound.