Spot gold XAU= was almost flat at $1,338.20 an ounce at 0059 GMT.
Advertisement
Gold fell to a two-week low on Monday as upbeat comments from Federal Reserve officials on the USA economy boosted expectations that the central bank could lift interest rates sooner rather than later.
Prices fell on Monday after weekend comments by the Fed’s No.2 policymaker, Stanley Fischer, saying that the United States central bank is close to hitting targets for full employment and two per cent inflation, raising the prospect of a U.S. rate increase.
New York Fed President William Dudley said last week a rate hike would be possible at the Fed’s next policy meeting in September, though interest rate futures contracts indicate that market is pricing in about 50/50 odds of an increase in December.
Traders fear Federal Reserve chair Janet Yellen may use the meeting to indicate that U.S. interest rates are going up.
The Fed last week sent mixed messages on an increase in its July meeting minutes, though some members have suggested rates could rise as soon as next month.
“We likely will see more weakness in the precious group at least until Fed Chair Yellen provides a little more clarity about the future course of interest rates on Friday”, INTL FCStone analyst Edward Meir said in a note.
Gold is sensitive to higher rates which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Spot gold may revisit its August 22 low of $1,331.35 per ounce, as suggested by its wave pattern and a triangle, according to Reuters technical analyst Wang Tao.
The Fed is close to hitting its targets for full employment and 2 percent inflation, the Fed’s No. 2 policymaker Stanley Fischer said on Sunday in comments that did not address when the US central bank should next raise interest rates.
The US dollar rose 0.4 per cent against a basket of six major currencies investors began to price in a greater likelihood that the Fed will raise rates this year, while stocks on major markets fell worldwide.
Advertisement
Platinum edged higher 0.4 percent at $1,103.40, hovering near about four-week low hit in the previous session.
