Gold initially rallied $20 an ounce or more after the comments as the greenback dropped versus other major currencies. But the dollar then turned decidedly higher, and gold pared gains, after the Fed’s No. 2, Stanley Fischer, in an interview with CNBC, said Yellen’s speech was “consistent” with the possibility of two rate increases this year. Fischer said the August jobs report will influence the central bank’s rate decision, emphasizing Yellen’s emphasis on the importance of incoming economic data.
The focus for the metal will shift to Friday’s jobs report, which will help the Fed’s path forward and the long-term outlook for the dollar.
The prospect for higher interest rates usually lifts the dollar, depressing the value of precious metals priced in the currency. And a rate increase tends to cut demand for assets that don’t provide a yield, including gold.
On Monday, the U.S. ICE Dollar Index DXY, +0.23% rose as high as 0.2%.
December gold GCZ6, -0.20% added $1.20, or less than 0.1%, to settle at $1,327.10 an ounce. After Fed members stoked speculation for a rate increase sooner rather than later, gold futures fell about 1.5% last week, the biggest weekly decline since July 15, FactSet data showed.
“The price of the yellow metal is still in the consolidation phase,” said Nico Pantelis, head of research at Secular Investor.
He said gold could test lows around $1,280 in the next few weeks, with “late summer doldrums” in gold possibly lasting into September and phasing out in October. But in the last months of the year, Pantelis said he expects the bull run for gold to resume—and it may climb to $1,400 or higher. Year to date, futures are up roughly 25%.
Adrian Ash, head of research at BullionVault, said that with the month of August having proved to be “dull as usual for precious metals,” gold’s low volumes and tight trading ranges are set to end this week as London re-opens after Monday’s U.K. bank holiday.
The dollar and gold were jostled in volatile trading after Federal Reserve Chairwoman Janet Yellen’s speech at the Kansas City Fed’s annual economic symposium at Jackson Hole, Wyo., on Friday. She said the case for an increase in the federal-funds rate had strengthened in recent months but would remain dependent on what incoming data say about the U.S. economy.
Gold initially rallied $20 an ounce or more after the comments as the greenback dropped versus other major currencies. But the dollar then turned decidedly higher, and gold pared gains, after the Fed’s No. 2, Stanley Fischer, in an interview with CNBC, said Yellen’s speech was “consistent” with the possibility of two rate increases this year. Fischer said the August jobs report will influence the central bank’s rate decision, emphasizing Yellen’s emphasis on the importance of incoming economic data.
The focus for the metal will shift to Friday’s jobs report, which will help the Fed’s path forward and the long-term outlook for the dollar.
The prospect for higher interest rates usually lifts the dollar, depressing the value of precious metals priced in the currency. And a rate increase tends to cut demand for assets that don’t provide a yield, including gold.
On Monday, the U.S. ICE Dollar Index DXY, +0.20% rose as high as 0.2%.
Economists surveyed by MarketWatch forecast the U.S. added a solid 160,000 new jobs in August.
Meanwhile, December silver SIZ6, -0.34% added 11.4 cents, or 0.6%, to $18.859 an ounce after registering a 3.6% weekly drop.
Among exchange-traded funds, the SPDR Gold Trust GLD, +0.20% was up 0.3% as gold futures settled, while the iShares Silver Trust SLV, +1.02% added 1%. The VanEck Vectors Gold Miners ETF GDX, +0.22% rose 0.9%.
In other metals, December copper HGZ6, +0.17% shed about half a cent to $2.079 a pound. October platinum PLV6, -0.19% added $3.40, or 0.3%, to $1,081.10 an ounce, while the December palladium contract PAZ6, -0.01% rose $5.50, or 0.8%, to $699.25 an ounce.