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New York, US (BBN) – Gold drifted higher in Asia on Tuesday with markets keeping a close eye on geopolitical risks and noting comments from the Fed chief that suggested the central bank is on track with plans to hike rates as forecast.
Gold for April delivery on the Comex division of the New York Mercantile Exchange rose 0.12 per cent to $1,255.35 a troy ounce, reports
Copper futures eased 0.15 per cent to $2,602 a pound.
The Federal Reserve’s plans to raise US interest rates gradually are aimed at sustaining full employment and near-2-per cent inflation without letting the economy overheat, Fed Chair Janet Yellen said on Monday.
“I think we have a healthy economy now,” Yellen said at an event at the University of Michigan’s Ford School of Public Policy in Ann Arbor.
Yellen repeated earlier comments that the economy is expected to continue to grow at a moderate pace.
“Whereas before we had our foot pressed down on the gas pedal trying to give the economy all the oomph we possibly could, now allowing the economy to kind of coast and remain on an even keel — to give it some gas but not so much that we are pressing down hard on the accelerator — that’s a better stance of monetary policy,” she said.
“We want to be ahead of the curve and not behind it.”
Overnight, gold prices traded below breakeven on Monday, as increased expectations the Federal Reserve would hike rates in June offset a rise in geopolitical tensions in the Middle East and Korea.
Dollar denominated assets such as gold are sensitive to moves in the dollar, as a strengthening greenback, tends to lessen demand for the yellow metal, making it more expensive for foreign buyers.
Trading volumes across markets remained thin, as investors paused to reflect on rising geopolitical tensions in the Middle East, after last week’s US missile strike on an airbase in Syria.
Meanwhile, geopolitical tensions in Asia surfaced, following the US decision to move a Navy strike group toward the Korean peninsula amid continued missile tests by North Korea.
Expectations that the Federal Reserve will hike rates in June continued to limit upside for gold prices.
According to’s Fed rate monitor tool, over 52 per cent of traders expected the Fed to hike interest rate in June, compared to 49 per cent a week earlier.