Gold futures contracts slipped lower this morning, during Asian trade hours, to a two week low thanks to a stronger US dollar. There is the possibility of policy direction news, and possible monetary policy tightening in the United States ahead of the Federal Reserve’s two day monetary policy meeting slated to begin on Tuesday. This has weighed heavily on the yellow metal.
As of 1 am GMT, the price of Spot gold (XAU/USD) was down 0.2 percent to $1,316.50 an ounce. This comes after the metal fell earlier to $1,315.10. This was its lowest level since August 31. US gold futures, for December delivery, shed 0.4 percent to $1,320.60 an ounce.
Asian markets were a bit higher, this morning, as the US dollar firmed in a cautious start to a week. The Federal Reserve is likely to debate what to do with its bloated balance sheet. This is part of a long reversal of really cheap money worldwide.
The dollar remains near a seven week high against the yen on Monday. The dollar is being supported by a rise in Treasury yields. The British Pound is steady, this morning, after rallying last week. The Sterling is being supported by expectations that the Bank of England could raise interest rates soon. A Bank of England policymaker, who had the biggest advocate of ultra-low borrowing costs, stated that rates might need to rise over the next couple of months.
Gold Investors eye Geopolitics
The US Ambassador to the United Nations, Ms. Nikki Haley, said Sunday that the United Nations Security Council has run out of options with North Korea’s nuclear program. She said that the United States may have to turn the matter over to the Pentagon. This puts a military strike on the table, once again.
In other central bank news, the Russian Central Bank lowered its main interest rate to 8.5 percent from 9 percent on Friday. The bank said it will deliver more cuts in the next six months as the inflation rate slows.