Gold futures drifted into negative territory Thursday in the US after another Federal Reserve member indicated that a September rate hike was possible.
Gold for December settlement on the Comex division of the New York Mercantile Exchange fell $8.10 or 0.6 percent to $1,341.10 per ounce. Trade has ranged from $1,339.10 to $1,353.90.
Richmond Fed President Jeffery Lacker said the case for a September hike was going to be “strong” and echoed his colleague Esther George who said on Wednesday that she too saw the US labour market approaching full employment.
The hawkish rhetoric – along with employment claims coming in better-than-expected at 259,000 – led to a minor dollar revival and was last trading on the 95.03 on the dollar index.
Markets are likely to be muted until the next Federal Reserve meeting concludes on September 21. Investors will be keen for any hints or speculation from other Fed members about their thinking on raising interest rates.
Still, with inflation falling below the Fed’s two percent target and uneven GDP growth, prediction markets are projecting that chairwoman Janet Yellen and her fellow central bankers will await until 2017 before lifting rates.
“There is little prospect that the US Fed will raise rates in September, and most likely not in December either,” Tom Kendall, Head of Precious Metals Strategy at ICBC Standard Bank, said. “If we are wrong, however, gold is vulnerable to a sizeable wash-out of speculative and short-term investment money.”
Earlier today, the European Central Bank kept interest rates unchanged and president Mario Draghi said he sees rates at present or at a lower level for a sustained period of time. He did add that he expects real GDP to grow at a moderate but steady pace moving forward.
Meanwhile in US markets, the Dow Jones industrial average and S&P were each down 0.3 percent, while the dollar strengthened 0.1 percent to $1.1252 against the euro.
As for other precious metals, Comex silver for December settlement fell 16.3 cents or 0.8 percent to $19.685 per ounce. Trade has ranged from $19.630 to $20.020.
Platinum for October delivery edged down $7.20 or 0.7 percent to $1,085.60 per ounce, while the most active palladium contract stood at $687.25 per ounce, down $1.10.
(Editing by Tom Jennemann)
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Source: Bullion Desk News
