Gold futures closed higher on Friday in the early morning of the 23rd Beijing time. But gold closed below its highest level of the day after Federal Reserve Chairman Colin Powell said it would soon scale back its monthly bond purchases.
Mr Powell said on Friday that the Fed was on track to begin to reduce its asset purchases, noting that he still expects inflation to abate next year as novel coronavirus's pressure subsides, but it is hard to say how long it will take to overcome supply bottlenecks.
"supply constraints and rising inflation are likely to last longer than previously expected and into next year, as will wage pressures," Mr Powell said in an online panel discussion hosted by the Bank for International Settlements and the Bank of South Africa.
The most likely scenario, he says, is that inflationary pressures abate and job growth begins to resume. But "if we see inflation risks continue to rise, we will certainly use our tools."
Powell said that if the Fed sees a serious risk of rising inflation expectations, it will raise interest rates. But he believes it is time to curtail bond purchases rather than raise interest rates. He added that the Fed is expected to start scaling back its bond purchases soon and complete the process by mid-2022.
Powell also warned that the economic recovery is very uneven. The Fed needs to be patient, but it is watching very carefully. The Fed is carefully monitoring inflation and will adjust accordingly.
Mr. Powell's remarks undermined gold's gains in the morning as investors worried that the surge in inflation after the COVID-19 epidemic could undermine purchasing power.
Gold futures for December delivery on the New York Mercantile Exchange rose $14.40, or 0.8%, to close at $1796.30 an ounce, rising as high as $1815.50. Gold futures rose 1.6% this week, the fourth rise in the past five weeks.
December silver futures closed 28 cents higher, or nearly 1.2%, at $24.449 an ounce, also below an intraday high of $24.92. Silver futures are up 4.7% this week, the biggest weekly gain since the week of May 7.