Gold nudged lower in the US on Tuesday morning – the unfolding drama in China is not discouraging some investors from preparing for higher US interest rates from September.
Gold for December delivery on the Comex division on the New York Mercantile Exchange was last down $1.90 or 0.2 percent at $1,151.70 per ounce. Trade has ranged from $1,143.50 to $1,156.30 so far.
Atlanta Federal Reserve president Dennis Lockhart expects interest rates to normalise some time this year, he said in a speech, but he made no mention of a potential September rate hike.
The Federal Open Market Committee (FOMC) has been debating over the past few years the appropriate time to raise interest rates, which have been at near-zero levels since December 2008 – it has been more than a decade since the FOMC last increased rates.
“The recent recalibration of Fed policy expectations means that the reaction function, should the Fed proceed with a September rate hike as our economists expect, would now hold greater downside risks,” UBS analyst Joni Teves said in a note.
“We continue to view $1,050 as a level that the gold market could potentially test in the coming weeks in response to a Fed rate hike,” she added.
The market pegs the probability of a rate rise at 21 percent, down from around 50 percent at the start of the month, according to the CME Group FedWatch.
Fears that a Chinese slowdown might disrupt tentative economic growth in the US were exacerbated yesterday when global equity markets turned sharply lower
The Dow Jones industrial average declined more than 1,000 points on Monday’s opening bell before halving the losses as the trading day progressed.
Wall Street is braced for a strong rebound today after the People’s Bank of China (PBoC) cut lending rates 25 basis points to 4.6 percent, the fifth rate reduction since November, in response to further declines in equities – the Shanghai Composite Index fell 7.6 percent overnight.
Germany’s DAX and France’s CAC-40 were each up 4.3 percent, while the euro was 1.2 percent softer at $1.1478 against the dollar.
Meanwhile, inflows into gold ETFs continued – holdings in the funds tracked by FastMarkets have increased to 1,536.95 tonnes.
In data, China’s leading indicators at 0.9 percent were better that expected but the previous reading was revised lower to 0.6 percent. In Europe, the German Ifo business climate at 108.3 was better than the forecast 108.3.
US figures due later includes the HPI, the flash services PMI, consumer confidence, new home sales and the Richmond manufacturing index.
As for the other precious metals, Comex silver for September delivery was unchanged at $14.760 per ounce. Trade has ranged from $14.610 to $14.930.
Platinum for October delivery on the Nymex rose $4.50 to $996 per ounce, while the most-actively traded palladium contract was at $555.90, down $19.15.
(Editing by Mark Shaw)
The post Gold nudges lower, US September rate rise in the balance appeared first on The Bullion Desk.
No comments:
Post a Comment