Gold Rates Steady After Split Among Policymakers

न्यूज़ वर्ल्ड इंडिया | 0
| July 6 , 2017 , 09:04 IST

Gold rates have finally steadied after an eight-week low reached earlier after Federal Reserve minutes showed a growing split among policymakers regarding the inflation outlook and US dollar pare gains.

According to the minutes, the central bank was split on how inflation may impact the future pace of interest rate increases.

"We changed our call for the next Fed hike by moving it to December (from September) and the June Fed minutes seem to confirm that the September meeting will instead be used to announce the start of the run-off of the central bank's balance sheet," said chief economist for CIBC Capital Markets Avery Shenfeld, in a statement.

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Spot gold reduced 0.02 percent at the rate of $1,223.37 an ounce on Wednesday after it reached the lowest since May 10 at $1,217.14.

The recent missile launch by North Korea led to a brief rally for gold, which is considered to be a safe investment during times of uncertainty.

The US gold futures for August delivery were fixed at $1,221.70 an increase of 0.2 percent from Monday's settlement before the US July 4 holiday.

After rising 0.3 percent, the dollar index witnessed little changes. A stronger dollar value makes gold more expensive for those using other currencies and higher bond yields increase the opportunity cost of using non-yielding bullion.

"We've seen the dollar rebound from recent lows and Treasury yields moving higher. That is a very powerful driver of the gold market," Julius Baer analyst Carsten Menke was quoted by Reuters as saying.

While yields eased on Wednesday, they had risen sharply in recent weeks as several central banks indicated that they would tighten the monetary policy.

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The Fed officials meanwhile appeared undeterred by the weak economic data and low inflation that caused gold prices to drop by more than 3 percent from the June 23 high of $1,258.81.

For investors, the US employment data on Friday could also influence the pace of rate rises.

The rates of other precious metals have also dropped, with silver falling as low as $15.84, it's weakest since December and platinum dropping to $896.25 per ounce, the lowest since May 9. Palladium rates also dropped by 1.3 percent to $840.70 an ounce.