In the past few months, the Fed has been swaying back and forth on whether to raise rates this year, keeping investors across the globe on tenterhooks.
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Federal Reserve Chair Janet Yellen painted a rosy picture of the USA economy at an economic symposium on Friday and said the case for a rate hike was strengthening, but gave little indication on when the central bank could next move.
Asked about the dollar on Tuesday, Fischer said the currency’s strength affected USA inflation and company profits but improvements in the labor market showed the economy had withstood this headwind.
At the Jackson Hole Symposium, Yellen said that the FOMC continues to 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.
Fed Vice Chair Stanley Fischer said the Fed chief’s comments were a sign of how close policymakers could be to raising rates if data kept pointing to a good economic outlook.
Fed Chair Janet Yellen cited the odds for United States interest rate hikes have “strengthened” in recent months due to progresses in the jobs market and to expectations for firm economic growth. However, reading above 200,000 could make a strong case for higher interest rates in the near term.
Platinum for October settlement ticked down 20 cents or less than 0.1 percent to $1,077.50 per ounce, while the most active palladium contract stood at $683.85 per ounce, down $8.30. Stock markets in Europe and Asia struggled today, whereas shares futures in the USA remained flat. The dollar edged down 0.1 percent to 101.78 yen, moving away from Monday’s high of 102.39, while the euro also inched 0.1 percent lower to 113.87 yen. That reinforced bets of a rate rise soon, even as other data showed US inflation remained subdued. In Friday’s session, it broke through its previous support level where it had fallen to its position today. But earlier in the session, it rose to 95.608, its highest since August 16.
Analysts said prices were also depressed by worries over the outcome of a meeting next month between OPEC and Russian Federation aimed at addressing a global supply glut.
In commodities, the rally in the dollar drove crude lower.
Iran also said late last week that it would only cooperate in upcoming producer talks in September if other exporters recognized Tehran’s right to regain market share lost during worldwide sanctions that were only lifted in January. U.S. gold futures for December delivery were down $4 an ounce at $1,321.90. The MSCI Asia Pacific Excluding Japan Index fell 0.8% as of 9:12 a.m.in Tokyo.
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“On Friday afternoon, gold initially reacted to the speech by Fed Chairwoman Yellen at Jackson Hole by surging above $1,340, but was unable to sustain this level, and ended trading in negative territory”, Commerzbank said.
