Gold bars weighing one kilogram each sit on a table in the vault of gold vendor in Munich, Germany. (Photographer: Guenter Schiffmann/Bloomberg)

Gold Advances as Investors Weigh `Dove' Powell as Next Fed Chief

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(Bloomberg) -- Gold rose as investors contemplated the prospect of Jerome Powell taking the top job at the Federal Reserve, weighing the outlook for interest rates and the dollar under the leadership of a policy maker who’s been supportive of current Chair Janet Yellen’s strategy of gradual tightening.

Bullion for immediate delivery gained as much as 0.5 percent to $1,281.49 an ounce, the highest in a week, and traded at $1,277.98 at 2:05 p.m. in Singapore, according to Bloomberg generic pricing. The metal’s advance came as the Bloomberg Dollar Spot Index lost 0.3 percent.

Gold has climbed this year, building on gains seen in 2016, as policy makers opted for two rate increases, and took the first steps in paring the bank’s $4.5 trillion balance sheet that was amassed as the Fed undertook an unprecedented program to revive the world’s top economy. President Donald Trump will announce his decision Thursday at 3 p.m. Washington time. Fed Governor Powell is in line for the post, people familiar with the decision said.

“Powell is considered to be a dove and so he’s likely to keep interest rates low-for-longer,” Fawad Razaqzada, an analyst at brokerage Forex.com, said in a note. “But let’s not forget also that this is a NFP week,” said Razaqzada, referring to the nonfarm payrolls data, adding the release “means not many people are ready to commit in one or the other direction.”

The speculation over the Fed succession comes as the central bank upgraded its assessment of the economy and reinforced expectations of a December hike at the end of its policy-setting meeting Wednesday. Investors are also weighing uncertainty about the prospects of Trump’s U.S. tax cuts as there have been conflicting reports when and how the rate on companies would be lowered.

Powell’s appointment to the biggest job in the financial world is subject to Senate confirmation. He’s been a Fed governor since 2012, and in that time has never dissented from a monetary-policy decision. The Washington native would be taking over at a tricky time, with inflation well below the bank’s 2 percent target, while asset prices are at levels considered lofty by policy makers.

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