Gold Price: XAU/USD edges higher above $5,400 as traders await Trump’s Fed Chair pick

NEW YORK (January 29) Gold price (XAU/USD) holds positive ground around $5,405 during the early Asian session on Friday. The precious metal hit a record high near $5,600 before paring gains due to profit-taking in the previous session. Traders will closely monitor the developments surrounding President Donald Trump’s pick for the new Federal Reserve (Fed) Chair. The US Producer Price Index (PPI) report is due later on Friday.  

Bloomberg reported late Thursday that Trump will announce his choice to replace Jerome Powell as the chair of the Fed on Friday morning. Trump said that his pick will do a "good job" and reiterated his expectation that the central bank’s new leader will lower interest rates. 

A more dovish chair would increase bets on further interest-rate cuts this year, which could lift the Gold price. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.

Geopolitical uncertainty could boost traditional safe-haven assets such as Gold. Trump on Wednesday urged Iran to “come to the table” and negotiate a “fair and equitable deal,” or the next US attack would be far worse. Iran responded with a threat to strike back against the US, Israel, and those who support them.

On the other hand, traders might book some profits in the near term as the yellow metal has surged nearly 100% over the last 12 months. “We are seeing a dramatic sell-off after precious metals made new recent all-time highs,” said David Meger, director of metals trading at High Ridge Futures.

FXStreet