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Wednesday, August 17, 2022

Gold Prices Dip in Asia With Fed Language Seen Crucial For Direction

Gold Prices Dip in Asia With Fed Language Seen Crucial For DirectionGold dips in Asia

Investing.com – Gold prices dipped in Asia on Monday with the market prepared to listen closely to the Fed commentary this week after it reviews rates and in particular language on the impact of expected tax cuts.

for February delivery rose 0.11% to $1,249.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

The Fed meets this week and is widely expected to hike interst rates by a quarter point. The European Central Bank, Bank of England and the Swiss National Bank are also due to hold monetary policy meetings, although no changes are expected.

Last week, gold prices fell to a four-month low on Friday and posted the largest weekly fall since May after Friday’s stronger-than-expected U.S. jobs report underlined expectations for a rate hike by the Federal Reserve at its upcoming meeting.

The U.S. economy added 228,000 jobs in November, the Labor Department reported, surpassing the 200,000 forecast by economists, while the unemployment rate held steady at 4.1% for a second consecutive month.

Wages rose 0.2% for the month, and 2.5% from a year ago, which was below forecasts of 0.3% and 2.7%, respectively.

The Fed is widely expected to raise interest rates at this week’s monetary policy meeting and is currently seen tightening two to three times next year, but concerns over tepid wage growth could alter the outlook for 2018.

Expectations for higher interest rates are typically negative for gold as the precious metal struggles to compete with yield-bearing assets like Treasury’s when borrowing costs rise.

A weaker dollar typically tends to support gold, which is denominated in the U.S. currency and becomes more affordable to foreign buyers when the dollar declines.

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Source: Investing.com

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