New York, US (BBN) – Gold prices fell in Asia on Thursday with more investors expecting the Fed to hike rates this month, though sentiment remains mixed with many saying the central bank could wait a month or two for further clarity on economic plans by President Donald Trump.
Gold for May delivery on the Comex division of the New York Mercantile Exchange fell 0.26 per cent to $1,246.75 a troy ounce, while copper futures gained 0.29 per cent to $2.739 a pound as investors awaited developments that have led to two major copper mines in Chile and Indonesia to halt operations over labor and regulatory issues, reports
Overnight, gold Futures slumped on Wednesday, as the dollar firmed after hawkish comments from several Federal Reserve officials raised expectations of a March rate hike.
Gold started the session on the back foot pressured by a surge in the dollar, after hawkish comments from Fed Presidents’ Williams, Dudley and Harker on Tuesday drove up the likelihood of a March rate hike.
Philadelphia Fed President Patrick Harker sparked hopes of March rate hike on Tuesday, when he reiterated his view that he expects the central bank to raise US interest rates three times this year as long as the economy continues to strengthen.
New York Fed President William Dudley said he sees a rate hike in the “relatively near future”, which echoed comments from San Francisco Federal Reserve Bank President John Williams, who suggested that the central bank has to raise interest rates in order to avoid a ‘too hot’ economy that in the end isn’t sustainable.
According to’s Fed rate monitor tool more than 60 per cent of traders expect the Fed to increase interest rates in March.
Gold is sensitive to moves in US interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Meanwhile a mixed bag of US economic data had little impact on the yellow-metal, after February US Manufacturing data beat expectations while January US construction spending was weaker than expected.
The February ISM manufacturing index rose to 57.7, which beat expectations of 56.0 reading while US construction spending fell 1 per cent in January, well below expectations of 0.6 per cent increase.