Gold inched lower on Tuesday, as investors turned cautious after the metal failed to sustain a recent rally, though it held near the previous day’s two-week high after the Federal Reserve further dampened speculation about an imminent US rate rise.
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The Dow Jones industrial average gained 135 points, or 0.8 percent, to 17,941 as of 2:57 p.m. Stocks were modestly improved, the S&P 500 rising 0.5% to its best level since November.
Yellen’s remarks followed Friday’s monthly jobs report that raised concerns over the ability of the economy to absorb a rate hike as early as June.
Most of the Asian equity benchmarks are trading up in the early deals on Tuesday after dovish comments from the Federal Reserve Chair Janet Yellen indicated that a United States interest rate increase will only be gradual, and as crude oil prices settled overnight at their highest level in 2016. World stocks hit five-week highs on Tuesday on Yellen’s dovish tone and a seven-month peak in crude prices cheered oil companies.
OIL: Benchmark U.S. crude oil added 67 cents, or 1.3 percent, to $50.36 a barrel in NY.
The Federal Reserve increased interest rates for the the first time in almost a decade last December and two more rate hikes have been expected this year.
“We know the Fed wants to carry on normalizing monetary policy but they won’t. if the economy is actually slowing”, Macquarie analyst Matthew Turner said. Sterling also climbed 0.7 per cent to $1.4524 as jostling continued over the UK’s June 23 vote on its European Union membership.
“Spooked by Friday s jobs report, the market became uncertain whether we d have even one rate hike this year”, Toshihiko Matsuno, chief strategist at SMBC Friend Securities, told Bloomberg News.
-The dollar index, which tracks the USA currency against a basket of six major rivals, nudged up 0.1 percent to 93.959, but it remained within sight of its overnight low of 93.745, its weakest level since May 11.
Yellen, who called that report “disappointing”, had said recently that the Fed would probably raise interest rates in the next few months if the economy kept getting stronger.
“Output is not increasing as much as an increase in employment, hence we have a fall in productivity”.
Europe’s broad FTSEurofirst 300 index snapped two days of gains to close down 0.54 percent at 1,352.91.
“Gold could easily see a further $US20 an (ounce) increase, given favourable macro-economic news, but only a break above $US1,290 would encourage new demand to come in”, MKS SA head of trading Afshin Nabavi said. Germany’s DAX jumped 1.9 percent to 10,307.93 while France’s CAC 40 rose 1.4 percent to 4,485.76.
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CURRENCIES: The dollar rose to 107.79 yen from 107.52 yen while the euro rose to $1.1374 from $1.1357.
