Gold Prices Dip as Potential Rate Hikes Weigh

Investing.com – Gold prices traded lower on Wednesday as a Federal Reserve policymaker reiterated the need for rate hikes and a stronger dollar weakened demand for the precious metal.

At 11:42 AM ET (15:42 GMT), for December delivery on the Comex division of the New York Mercantile Exchange slipped $1.10, or 0.09%, to $1,217.20 a troy ounce.

Meanwhile, the , which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched 0.02% to 95.02.

A stronger greenback makes the dollar-denominated metal more expensive for holders of other foreign currencies, dampening demand from foreign investors.

In a session with no major economic reports, Richmond Fed president said that the U.S. central bank should , given the current strength of the American economy.

“It is difficult to argue that lower than normal rates are appropriate when unemployment is low and inflation is effectively at the Fed’s target,” he said in a speech delivered Wednesday.

Barkin added that the underlying economy was strong and was supported by recent additional fiscal stimulus, reducing the risk of normalization.

The Fed is widely expected to raise rates for the third time this year to a range between 2% and 2.25% at its next meeting on September 25 and 26.

Higher interest rates tend to weigh on demand for gold, which doesn’t bear interest, in favor of yield-bearing assets.

Investors will pay close attention to inflation data this week, with producer prices out on Thursday and the consumer price index at the end of the week.

Headline inflation is forecast to inch up to 3.0% while core inflation is expected to hold at 2.3%, above the Fed’s 2% objective.

In other metals trading, edged forward 0.01% at $15.375 a troy ounce by 11:45 AM ET (15:45 GMT).

fell 1.22% to $891.90 an ounce, while sister metal lost 0.36% at $828.40.

In base metals, dipped 0.04% to $2.751 a pound.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.