Spot gold was down 0.9 percent at $1,153.70 an ounce at 1130 GMT, while United States gold futures for December delivery were down $11.10 an ounce at $1,153.40.
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Fed governor Lael Brainard overnight made what she called ” the case for watching and waiting…[because] in contrast to the considerable progress in the labor market, inflation has been stubbornly low, even excluding energy prices”.
Tarullo, who rarely comments in public on monetary policy, is the second Fed governor this week to urge caution on the timing of rate hikes. It hit an intraday high of $1,169.00 earlier in the session.
The Fed could still raise rates this year, but that’s “an expectation, not a commitment”, Fed Vice Chairman Stanley Fischer said Sunday to the Group of 30, a private-sector organization.
“It does seem as though they’re leaving the option open for a rate hike this year, but at the same time they’re not committing to it either”, said Janu Chan, a senior economist in Sydney at St George Bank Ltd, which is a division of Westpac Banking Corp.
The strength that we saw last week is most likely attributable to traders/investors continued celebration of the latest release of the FOMC mins…Those mins – released last week showed that Fed members remain concerned about global growth and the risk it poses to our economy… The Fed hasn’t raised interest rates since July 2006.
Most private economic forecasters surveyed by The Wall Street Journal expect the Fed will stay on hold at its October 27-28 policy meeting but raise rates in mid-December.
“We’ve also seen a bit of weakness in China that has also contributed to the general safe-haven demand for gold as an alternative asset”.
Weak Chinese data on Wednesday added to global growth concerns, another factor investors believe could deter the Fed from hiking rates this year.
The central bank last month opted to delay an interest rate hike considering the low inflation environment as well as the turbulent global economic and financial market development. With inflation falling into negative territory, real wage growth in the U.K.is the highest it has been since before the financial crisis.
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“Anything that the Fed says that could shed a few light on what they’re going to do with regards to interest rates and how it subsequently affects the dollar will be watched closely”, David Lennox, an analyst at Fat Prophets in Sydney, said by phone.
