Gold prices hold near 3-1/2 week low on Fed rate hike prospects

By: | Published: May 24, 2016 10:50 AM

US rates being kept too low for too long could cause financial instability in future and stronger market expectations for a rate rise are "probably good", St. Louis Federal Reserve President James Bullard said on Monday.

gold monetisation schemeSpot gold edged down 0.1 percent to ,247.30 per ounce by 0056 GMT. The metal fell to ,242.63 an ounce, the lowest since April 28 on Monday. (Reuters)

Gold slipped in early trade on Tuesday to trade near a 3-1/2 week low hit a day earlier, as prices remained under pressure on expectations that the U.S. Federal Reserve will increase interest rates as early as June.

FUNDAMENTALS

* Spot gold edged down 0.1 percent to $1,247.30 per ounce by 0056 GMT. The metal fell to $1,242.63 an ounce, the lowest since April 28 on Monday.

* U.S. gold futures dipped 0.3 percent to $1,248 per ounce early on Tuesday

* San Francisco Fed President John Williams said the central bank is on track to hike rates in June or July despite risks such as a “Brexit” vote, and will continue with even more increases next year given U.S. economic strength, a top Fed official said on Monday.

* US rates being kept too low for too long could cause financial instability in future and stronger market expectations for a rate rise are “probably good”, St. Louis Federal Reserve President James Bullard said on Monday.

* Goldman Sachs economists said on Monday they estimated a 35 percent chance the Federal Reserve would raise its target on the federal funds rate at its June 14-15 policy meeting.

* Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.38 percent to 872.52 tonnes on Monday.

* The dollar index held steady and the greenback was firm at 109.260 yen, having fallen to as low as 109.120 overnight.

* Russia’s largest gold producer, Polyus, has evacuated 89 out of 153 of its miners blocked after a landslide at the Vostochny pit of its Olimpiada mine in Siberia, the company said.

* The Fed’s policymakers are scheduled to speak this week and are expected to back the case for a rate hike within months. Fed Chair Janet Yellen will be at a panel event hosted by Harvard University on Friday.

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