Gold Falls After Fed Comment on Rates
21 February 2017 - 11:59AM
Dow Jones News
By Ed Ballard
LONDON--Gold prices fell on Tuesday as the dollar strengthened
on the prospect of a U.S. rate increase in March.
The precious metal was down 0.6% at $1,228.42 a troy ounce in
morning trade in London, extending a decline sparked Monday by
Federal Reserve Bank of Philadelphia President Patrick Harker, who
said he could support raising short-term interest rates at the
Fed's next meeting.
The WSJ Dollar Index was up 0.5% at 91.41, making
dollar-denominated commodities more expensive for holders of other
currencies.
The U.S. session will bring a glut of commentary from U.S.
monetary policy makers, including speeches by three Fed officials
and the minutes of the Fed's January meeting.
"If they [the minutes] were to contain further indications of a
rate hike in the near future, gold would probably fall further,"
wrote analysts at Commerzbank.
The pressure could continue ahead of the Fed's March 15 meeting
if officials make a concerted effort to convince market
participants that they will lift rates three times this year, as
suggested by Fed Chairwoman Janet Yellen.
"Comments from several [Federal Open Market Committee] members
this week could also trigger some near-term volatility as these
feed through to Fed expectations," said Joni Teves, a precious
metals strategist at UBS.
Commerzbank noted that while the strong dollar is weighing on
dollar-denominated gold futures, gold is trading at a three-month
high around EUR1,168 an ounce in euro terms.
The strength is "hardly surprising" given the abundance of
political uncertainty surrounding Greek debt talks and upcoming
elections, the bank said.
Silver was down 0.8% at $17.90 an ounce, palladium was down 0.8%
at $766.15 an ounce and platinum was down 0.9% at $994.50 an
ounce.
Write to Ed Ballard at ed.ballard@wsj.com
(END) Dow Jones Newswires
February 21, 2017 06:44 ET (11:44 GMT)
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