Gold treads water on US Federal Reserve views, awaits July minutes

Dollar also edged away from seven week lows against yen and euro on Wednesday following hawkish comments from Fed officials

Gold was little changed early on Wednesday as hawkish comments from US Federal Reserve officials raised bets on a rate hike this year and traders await minutes of the last Fed policy meeting for more clues.

 

FUNDAMENTALS

• Spot gold was nearly flat at $1,345.80 an ounce at 0104 GMT. The metal rose 0.5 per cent on Tuesday.
• US gold slipped 0.4 per cent to $1,351.90 an ounce.
• The Fed is raising expectations for an interest rate rise this year, even as early as next month, after two policymakers on Tuesday said the economic stars now appear to be aligning despite weak US economic growth in the first half of 2016.
• New York Fed President William Dudley said a rate hike in September was possible, while Atlanta Fed President Dennis Lockhart said the US economy is likely strong enough for at least one rate increase before the end of 2016, with two a possibility.
• Traders saw a 55 per cent chance for the Fed to raise rates in December, up from 42 per cent on Monday.
• US consumer prices were unchanged in July as the cost of gasoline fell for the first time in five months and underlying inflation moderated, while US housing starts unexpectedly climbed and industrial production rose more than forecast in the same month.
• The dollar edged away from seven week lows against the yen and euro on Wednesday following hawkish comments from the Fed officials.
• The dollar index was little changed at 94.811 after losing 0.8 per cent on Tuesday, when it touched a 7-week trough of 94.426.
• Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.19 per cent to 962.23 tonnes on Tuesday. [GOL/ETF]

MARKET REPORT

• Asian shares stepped back from a one-year high on Wednesday following comments from the Fed officials, prompting investors to pause after rallies in recent weeks.