Gold Silver Reports — Gold trades under pressure amid hawkish Fed expectation — Gold prices were under pressure on Monday, touching a two-week low amid indications the Federal Reserve could raise interest rates as soon as next month.
Odds for a near-term rate hike mounted after Fed vice chairman Stanley Fischer said on Sunday that the U.S. economy was close to hitting the central bank’s targets for full employment and 2% inflation. Fischer’s speech was just the latest piece of hawkish rhetoric from top Fed officials. Last week, San Francisco Fed President John Williams, New York Fed Chief William Dudley and Atlanta Fed President Dennis Lockhart all said a September rate hike may be on the table.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose on Monday, pulling away from last week’s eight-week low of 94.05, as investors began to price in a greater likelihood that the Fed will raise rates this year.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. In the week ahead, market players will turn their attention to a highly anticipated speech by Fed Chair Janet Yellen at the annual meeting of top central bankers and economists in Jackson Hole, Wyoming, for fresh clues on the timing of the next U.S. rate hike. — Neal Bhai Reports