Hawkish comments on Friday by Fed Chair Janet Yellen and Vice Chair Stanley Fischer increased expectations the US central bank could hike at its September policy meeting, though most investors and economists view a single increase at the December meeting as more likely.
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“It’s hard to move until we see the jobs figures, after Fischer stressed that the August report would be a key factor, and that an interest rate hike could follow good numbers”, said Kumiko Ishikawa, senior FX analyst at Gaitame.Com Research Institute in Tokyo.
Gold is highly sensitive to rising USA interest rates which increase the opportunity cost of holding non-yielding bullion while boosting the dollar in which it is priced. Schlumberger declined $1.68, or 2.1 percent, to $78.96.
The greenback rose to session highs after the ADP National Employment Report on Wednesday showed USA private employers adding 177,000 jobs in August, slightly above the 175,000 forecast by a Reuters survey of economists.
Asian shares traded mixed this morning and oil prices slipped despite warnings of a tropical storm system developing around the Central-Eastern and Eastern Gulf of Mexico, while the dollar-yen pair hit a one-month high on expectations the Federal Reserve is moving closer to raising interest rates.
Mounting expectations for a Fed hike this year boosted financial stocks on both sides of the Atlantic, limiting losses in U.S. shares and helping the pan-European STOXX 600 hit its highest level since mid-August.
Trading was lighter in Europe on Monday, as the United Kingdom markets are closed for a public holiday.
The coupon maturity most sensitive to Fed expectations is coming off its steepest weekly sell-off since May after Fed Chair Janet Yellen said in a speech that policymakers “anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives”.
The euro was little changed at $1.1148 (0.852263 pounds), hovering near a three-week low of $1.1133 plumbed on Tuesday.
Dow Jones closed down by 0.26 percent, S&P 500 ended down by 0.20 percent, Nasdaq finished the day down by 0.18 percent.
Europe’s broad FTSEurofirst 300 index was last down 0.19 per cent, at 1,350.13. “Heading to the very front of the U.S. Treasuries curve would minimize duration risks, but foregos the yield pickup”.
The rate hike talk, which came out of the Fed’s central banking symposium at the end of last week, sent the dollar up past 102 yen, after having dropped to 99.9 yen last week. The Standard & Poor’s 500 index gave up 4.7 points, about 0.2 percent, to 2,171.7.
ENERGY: Benchmark U.S. crude oil fell 64 cents to $47.00.
The euro ticked up to US$1.1200 and 114.43 yen from US$1.1195 and 113.94 yen in USA trade.
Having initially lost ground after Mr Fischer’s appearance the commodity-related and emerging market currencies recovered, such that the Australian dollar was the top performer on Monday.
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Gold for December delivery was recently down 0.4% at $1,311.17 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest price since June 24.
