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Dollar rally sets gold back as markets await Fed minutes

dollars

Gold had its worst one day drop in six weeks yesterday. This morning the spot price was down to $1,270.31 while Tuesday saw gold for December delivery lose $10.70, or 0.8%, to move to $1,279.70.

The drop in price marks a change in fortune for the yellow metal which had been enjoying a more bullish run as investors looked to safe-haven assets following the rise in geopolitical tensions between North Korea and the US. That tension has now dissipated somewhat and the posting of data on American retail sales and manufacturing has drawn the focus back to how gold competes with other markets.

Today investors also await the release of the minutes from July’s Federal Reserve (The Fed) meeting which may give clues as to when the next interest rate hike will be. This, combined with the positive economic performance data, has seen the dollar rally. A move which typically has an inverse effect on gold. “The bullish dollar is shifting the focus away from the safe havens,” Naeem Aslam, chief market analyst at Think Markets told Reuters. “The increasing odds of the US interest rate hike could push the gold price below the $1,250 level and this could happen if the upcoming [Fed] minutes deliver some hawkish tone.”

However, Asian demand for gold continues to look robust. The Hindu reported Indian imports of gold reached $13.35 billion  during the second quarter of 2017, a significant rise over previous figures. In July imports were $2.10 billion, up from $1.07 billion in the same month last year. Indian gold importers have been given a boon following a recent free-trade agreement with South Korea, bringing down import duty to 3% from 10%.

Link to this article: : http://www.goldmadesimplenews.com/gold/dollar-rally-sets-gold-back-as-markets-await-fed-minutes-13351/

Posted by on Aug 16 2017. Filed under Gold News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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