Gold holds ground after 3% drop on Warsh's hawkish stance
This comes as the US Federal Reserve chair’s speech signalled interest rate hikes may be needed
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[BENGALURU] Gold prices were flat on Monday (Aug 31), after falling more than 3 per cent in the previous session following US Federal Reserve chair Kevin Warsh’s speech that signalled interest rate hikes may be needed.
Spot gold held its ground at US$4,455.29 per ounce by 0011 GMT after hitting its lowest level since Aug 19 earlier in the session.
US gold futures for December delivery fell 0.6 per cent to US$4,504.90.
The US central bank will “have work to do” if policymakers do not get the confidence they need that inflation is heading down to 2 per cent, Fed chair Warsh said on Friday, coming closer than he has to acknowledging interest rate hikes may be needed to ease price pressures.
Markets currently see a 57 per cent chance of a rate hike at Fed’s next policy meeting in September, compared with 36 per cent prior to Warsh’s comments, according to the CME FedWatch tool.
Higher interest rates often weigh on gold prices since holding a non-yielding asset becomes less attractive.
A series of US labour market reports is due this week, including job openings, the ADP employment report, weekly jobless claims and nonfarm payrolls data.
Iran condemned the US’ new economic sanctions on Friday as “state terrorism” while its supreme leader said he was banning acts that could harm “social cohesion” amid concern that more financial pain could spark unrest at home.
Among other metals, spot silver was flat at US$66.34 per ounce, platinum edged 0.1 per cent higher at US$1,822.46, while palladium gained 0.2 per cent to US$1,424.89. REUTERS
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