Gold prices “tend to reflect investors attitude toward monetary uncertainty and current or future central bank actions, primarily those of the Federal Reserve”, said Michael Cuggino, a fund manager at Pacific Heights Asset Management.
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Traders see about a 40 percent chance the Fed will raise rates in December, and give about even odds for the January meeting.
Tarullo was not the only Fed official supporting the postponement of interest rate hikes. Recall that Simpson was found not guilty in the murder of his ex-wife and another man despite seemingly overwhelming evidence that Simpson did, indeed, carry out the crimes. However, a weak United States nonfarm payrolls report earlier this month prompted the market to shift expectations of a Fed rate hike to 2016 and sell the dollar.
In one of the strongest defenses yet of a go-slow approach to rate policy, Fed Governor Lael Brainard said on Monday that the US central bank should hold off on any rate hike until it is clear that a global slowdown, trouble in China and other worldwide risks will not push the USA recovery off course.
Bullard supports a rate hike and opposed the decision to delay when the Fed met in September, but said, as a practical matter, the economic data since released is unlikely to convince other policymakers to increase rates when the Fed meets in two weeks. The metal climbed to $1,190 on Tuesday, its highest since June 22. These voices said that though policy normalization may not be far off, it would be better for the economy if the Fed effected a rate hike after gathering further proof that most aspects of the economy were ready for it.
The rate on three-month bills remained at the lowest level on record and the rate on six-month bills reached their highest level since late September.
USA stock index futures were little changed on Monday, ahead of a busy week of quarterly corporate results.
On Tuesday, Daniel Tarullo said in a CNBC interview that “right now my expectation is, given where I think the economy would go, I wouldn’t expect it would be appropriate to raise rates” this year.
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While USA unemployment, now at 5.1 percent is close to full employment, inflation remains well below the Fed target rate of 2 percent. Premiums on the Shanghai Gold Exchange, an indication of demand in top consumer China, fell to about 50 cents an ounce on Thursday from $2-$3 in the previous session.
