Gold drops as investors await hints on US rate hikes
Gold prices fell as the dollar gained on Tuesday, with investors waiting for clues on the timing of any increase in US interest rates from minutes of a Federal Reserve meeting and in a series of speeches by Fed officials this week.
The heads of five regional US Fed branches are scheduled to speak this week. In addition, Fed Board Governor Jerome Powell speaks on Wednesday, when minutes of the last policy meeting are also due.
Spot gold fell 0.4 per cent to $1,233.21 per ounce by 0550 GMT, while US gold futures lost 0.4 per cent, at $1,234.60.
"People are awaiting direction from the minutes of the last FOMC (Federal Open Market Committee) meeting. If it offers any significant indication that the Fed can raise rates in the next meeting, there will be a negative impact on gold," said Hareesh V, head of research at Geofin Comtrade Ltd. "Otherwise, prices can go higher again because of global uncertainty."
Gold is highly-sensitive to rising US interest rates, as it increases the opportunity cost of holding non-yielding bullion, while also boosting the dollar.
The dollar index was up 0.2 per cent at 101.16 as of 0616 GMT.
"Fed chief Janet Yellen recently signalled that the US economy was prepared for an early increase in key interest rates. Economic data confirming this assessment will put a strain on the gold price in the coming weeks and months," Heraeus Metal Management said in a note.
Political uncertainty including lingering doubts over US President Donald Trump's policies and the potential impact on the Fed's strategy, as well as elections in France and Netherlands, has offered broad support for the yellow metal, which has risen about 7 per cent this year.
"We anticipate that the generally positive sentiment in the gold market remains intact," analysts at Heraeus said.
Investor appetite has however shown signs of easing since gold hit a three-month high on Feb. 8.
Data also showed on Friday that speculators cut their net long position in COMEX gold for the first time in three weeks in the week to Feb. 14.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust , reported an outflow of 2.4 tonnes on Friday, the first in nearly four weeks.
Spot gold may break a support at $1,233 per ounce, according to Reuters technical analyst Wang Tao.
Meanwhile, spot silver fell 0.3 per cent to $17.96 per ounce, while platinum prices were down 0.2 per cent, at $995.90.
Palladium fell 0.5 per cent to $768.33 per ounce.
The heads of five regional US Fed branches are scheduled to speak this week. In addition, Fed Board Governor Jerome Powell speaks on Wednesday, when minutes of the last policy meeting are also due.
Spot gold fell 0.4 per cent to $1,233.21 per ounce by 0550 GMT, while US gold futures lost 0.4 per cent, at $1,234.60.
"People are awaiting direction from the minutes of the last FOMC (Federal Open Market Committee) meeting. If it offers any significant indication that the Fed can raise rates in the next meeting, there will be a negative impact on gold," said Hareesh V, head of research at Geofin Comtrade Ltd. "Otherwise, prices can go higher again because of global uncertainty."
Gold is highly-sensitive to rising US interest rates, as it increases the opportunity cost of holding non-yielding bullion, while also boosting the dollar.
The dollar index was up 0.2 per cent at 101.16 as of 0616 GMT.
"Fed chief Janet Yellen recently signalled that the US economy was prepared for an early increase in key interest rates. Economic data confirming this assessment will put a strain on the gold price in the coming weeks and months," Heraeus Metal Management said in a note.
Political uncertainty including lingering doubts over US President Donald Trump's policies and the potential impact on the Fed's strategy, as well as elections in France and Netherlands, has offered broad support for the yellow metal, which has risen about 7 per cent this year.
"We anticipate that the generally positive sentiment in the gold market remains intact," analysts at Heraeus said.
Investor appetite has however shown signs of easing since gold hit a three-month high on Feb. 8.
Data also showed on Friday that speculators cut their net long position in COMEX gold for the first time in three weeks in the week to Feb. 14.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust , reported an outflow of 2.4 tonnes on Friday, the first in nearly four weeks.
Spot gold may break a support at $1,233 per ounce, according to Reuters technical analyst Wang Tao.
Meanwhile, spot silver fell 0.3 per cent to $17.96 per ounce, while platinum prices were down 0.2 per cent, at $995.90.
Palladium fell 0.5 per cent to $768.33 per ounce.
