You are here

Gold hovers near 7-week low ahead of Yellen speech

gold24215.jpg
Gold slipped to a near seven-week low on Tuesday as investors looked to Federal Reserve Chair Janet Yellen's Senate testimony for signs of when the US central bank could raise interest rates.

[SINGAPORE] Gold slipped to a near seven-week low on Tuesday as investors looked to Federal Reserve Chair Janet Yellen's Senate testimony for signs of when the US central bank could raise interest rates.

Expectations the Fed will hike rates this year amid signals of a strengthening US economy have curbed gold's safe-haven appeal.

But investors are keen to see if Yellen will echo the minutes of the Fed's January meeting, when policymakers expressed the view that raising interest rates too soon may pour cold water on the US recovery.

Spot gold was off 0.2 per cent at US$1,199.12 an ounce by 0642 GMT. The metal fell on Monday to its weakest since Jan 5 at US$1,191.01.

sentifi.com

Market voices on:

Gold has fallen more than 6 per cent this month, nearly erasing January's 8.4 per cent gain, which was its biggest in three years. "With a healthy US economy, that gives the impetus for the Fed to start normalising interest rates and this is a very bearish signal for gold," said OCBC Bank analyst Barnabas Gan, who sees the metal at US$1,000 by the year-end.

US gold for April delivery dropped 0.1 per cent to US$1,199.50 an ounce.

With recent data pointing to a buoyant US labour market, Ms Yellen could be less hesitant about interest rate hikes than the minutes of the Fed's meeting last month suggested, Mizuho Bank said in a note. "While still data-dependent in timing the moves, the Fed is unwavering in its commitment to ultimately tighten," the bank said.

The US housing sector, however, remains fragile, lagging the overall economic recovery. More evidence of weakness surfaced on Monday when data showed US home resales fell sharply to their lowest level in nine months in January amid a shortage of properties on the market.

Ms Yellen will discuss the outlook for the US economy and monetary policy in her semiannual testimony before the Senate Banking Committee on Tuesday and then before the House Financial Services Committee on Wednesday.

REUTERS

grab

Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.

Find out more at btsub.sg/promo

Powered by GET.comGetCom