US Treasuries prices fell on Thursday as the minutes from the Federal Reserve’s September policy meeting strengthened the view that the central bank would not raise interest rates this year, spurring investors to pile into stocks from bonds.
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The minutes pointed to a deeply cautious Fed even before subsequent economic data showed a sharp slowdown in hiring by USA employers.
Spot gold edged up 0.1 percent to $1,140.10 an ounce by 0040 GMT, after dropping 0.6 percent in the previous session following the release of minutes from the Fed’s September 16-17 meeting.
“The tone from the FOMC minutes was slightly more dovish, although this wasn’t too surprising”, said ANZ. The jobless rate stood at just 5.1pc in August, in the middle of where the Fed believes it should be.
The European markets are seen opening higher on Friday amid bets major central banks will keep their ultra-loose monetary policies in place for as long as it takes to push inflation up and revive growth in the face of recent turbulence in emerging markets. This was reflected in the four-day price surge of the yellow metal, as the latter tends to appreciate in value on the back of prospects that interest rates may be kept on hold and in times of risk aversion in general.
Higher U.S. Treasury yields underpinned the dollar as equities rallied on expectations the Fed might hold off on hiking, with the yield on the benchmark 10-year note US10YT=RR at 2.065 percent in Asian trading, up from its US close on Wednesday at 2.060 percent.
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The precious metal had spent the last two days steadily climbing to $1,150 after a disappointing U.S. job’s report last Friday removed confidence that the Federal Reserve will raise interest rates this year. “Our call remains for a December hike, although clearly the U.S. data has deteriorated since this meeting and so the risks are that a few of those members previously in favour of a hike this year shift towards a later date for lift-off”, said Andrew Grantham, senior economist, director, for CIBC Economics, in a note. Against the Swiss franc, the dollar hit 0.96230 franc, its lowest level in almost three weeks.
