Forex Marketz Daily Forex News – Fully Markets Update
The price of gold inched lower Tuesday morning, during Asian trade hours, as the U.S. dollar traded steadily as the United States will continue to hike interest rates this year.
As of 1 am GMT, sport gold (XAU/USD) was down 0.3 percent to $1,317.06 an ounce. Last week, the price of the bullion was at highest level since September 15 at $1,325.86 an ounce. U.S. gold futures fell 0.2 percent at $1,318.10 an ounce.
The U.S. dollar index, which measures the almighty dollar against a basket of six other Forex units, was flat at 92.337.
Supporting the dollar, investors are looking for more U.S. interest rate hikes after Friday’s non-farm payroll data failed to challenge the outlook for monetary policy. The U.S. Federal Reserve is likely to stick to the course. Even though job growth slowed more than expected, there was an increase in monthly wages. This hints at labor market strength.
Gold Traders Listen to Fed Speak
Yesterday, in economic headlines, Atlanta Fed President Raphael Bostic, a voting member of the Federal Open Market Committee, said that two hikes should be needed in 2018. This is in because of weak price, inflationary, pressures
However, San Francisco Fed President John Williams said that the Fed could better fight a recession by keeping interest rates lower for longer. This will keep average inflation on a steady upward path. This is an economic or monetary theory of price level targeting.
Gold is very sensitive to rising U.S. interest rates. Why? Higher rates increase the opportunity cost of holding a non-yielding asset class, as it boosts the dollar, in which the underlying asset class is priced in.
