Investing.com - Gold prices moved higher on Tuesday as another member of the Federal Reserve weighed in on slowing down the central bank's tightening of monetary policy.
At 10:37 AM ET (15:37 GMT), gold futures for April delivery on the Comex division of the New York Mercantile Exchange gained $18.25, or 1.38%, to $1,340.25 a troy ounce, its best level since May 14.
Cleveland Fed president Loretta Mester, normally considered to be one of the Fed hawks, stated that she would favor slowing down the balance sheet normalization process.
Mester's remarks joined a wider chorus from the central bank as recent signs of economic weakness, including the largest decline in retail sales in nine years, have forced policymakers to reverse course 180 degrees from a previously more aggressive stance in favor of policy tightening.
“Quantitative tightening, which Federal Reserve chair Jerome Powell likes to refer to as ‘balance sheet runoff’, is no longer on autopilot,” Investing.com analyst Darrell Delamaide said.
The dovish shift in tone to the Fed’s message implies a longer pause in rate hikes, which in turn decreases the opportunity cost of holding non-interest bearing gold.
In other metals trading, palladium futures pressed higher as predictions that demand will rise this year as stricter emissions standards pump demand for the metal used in catalytic converters. At 10:40 AM ET (15:40 GMT), the metal gained 3.24% to $1,452.75 an ounce, a new record high.
“In combination with supply-side issues, the market is going to be in a sizeable deficit this year ... potential for better-than-expected demand from China will exacerbate that tightness,” ANZ analyst Daniel Hynes said.
-- Reuters contributed to this report.