An employee arranges gold bangles in a display cabinet at a Chow Tai Fook Jewellery Group Ltd. store in Shanghai, China. (Photographer: Qilai Shen/Bloomberg)

Fed's Powell Shakes Gold Out of Its Doldrums, Energizes Copper

(Bloomberg) -- Dovish comments from the Federal Reserve’s Jerome Powell suggesting slower-than-anticipated interest-rate hikes awakened gold from its recent slumbers and boosted most base metals.

The Fed chairman said interest rates are “just below” the so-called neutral range, softening previous comments that implied steady rate hikes were in the central bank’s foreseeable monetary policy. That helped send the Bloomberg Dollar Spot Index crashing and gold, which doesn’t pay interest, to its biggest gain in almost four weeks.

Greenback strength has dogged most metals this year as investors flocked to the American currency as a hedge against the impact of the simmering U.S.-China trade war. The presidents of both nations will have a chance to discuss the spat this weekend during a Group of 20 meeting in Argentina.

Fed's Powell Shakes Gold Out of Its Doldrums, Energizes Copper

Bullion for February delivery jumped 0.8 percent to settle at $1,229.80 an ounce at 1:30 p.m. on the Comex in New York, the biggest increase for a most-active contract since Nov. 1. The yellow metal had drooped in six of the past seven months. Copper for delivery in March climbed the most since Sept. 21, while most of the main metals on the London Metal Exchange ended higher. Meanwhile, spot palladium prices reached another record high, drawing further support from tightening supplies.

Powell’s views “suggest to most readers that after the December hike, they will see how the data comes in,” Tai Wong, head of base and precious metals trading at BMO Capital Markets, said by phone. The “speech could be a game changer if not walked back” and is more important than any possible statement coming out of the G-20, he added by email.

Shares of mining companies rallied in tandem with the metals and the main stock indexes in the Americas. The Bloomberg World Mining Index of 115 companies jumped after Powell’s comments were released, with Alcoa Corp. (+9.1 percent), Constellium NV (+8 percent), Kinross Gold Corp. (+5.8 percent) and Freeport-McMoRan Inc. (+5.7 percent) among the biggest gainers.

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