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Gold Trades Flat this Morning on Interest Rates

goldGold prices were flat Thursday morning during Asian trade hours. Price action was under pressure from the las Federal Reserve monetary policy meeting minutes and a rise in Treasury rates. The minutes showed policymakers confident in the need to keep raising interest rates in 2018.

As of 1 am GMT Spot gold (XAU/USD) were trading flat at $1,323.73 an ounce. This is the day after the bullion fell to its lowest weekly price point at $1,322.20. The yellow metal has shed 1.7 percent this week.

U.S. gold futures fell 0.3 percent at $1,328.1 per ounce.

The U.S. dollar index, which measures the dollar in a basket of currencies, rose 0.2 percent to 90.156.

The dollar is now at a better than one week high. This was hit on Wednesday, as the dollar continues its recovery from last week. The sawbuck was helped by the Fed minutes and by higher Treasury yields.

Gold Traders Watch Central Banks

The upbeat mood of the Federal Reserve regarding inflation in the FOMC meeting minutes, released on Wednesday, will increase investor expectations that incoming Fed Chair Jerome Powell will raise interest rates next month.

This sent Fed Funds futures higher. Three interest rate hikes are now priced in for the year. This is up from two in December.

Some U.S. policy makers, however, do feel that aggressive monetary policy tightening is not necessary.

In other central bank news, the Bank of England might need to raise interest rates faster than expected.  The BOE chief economist told parliament this on Wednesday. This is also a more hawkish tone.

In the Eurozone, business growth remained strong in February. Companies are very optimistic. More so than in more than in the previous five years. This was released in a private sector survey. Businesses do expect higher prices. Also a strong euro is starting to take a toll on exports.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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