Gold struggles after 2-day losing streak on US rate hike fears

By: | Published: September 29, 2015 8:08 AM

Gold was hovering little changed on Tuesday after a two-day losing streak, as fears over a looming US rate hike offset any safe-haven bids from weaker equities.

GoldGold was hovering little changed on Tuesday after a two-day losing streak, as fears over a looming US rate hike offset any safe-haven bids from weaker equities. (Express Photo)

Gold was hovering little changed on Tuesday after a two-day losing streak, as fears over a looming US rate hike offset any safe-haven bids from weaker equities, while platinum hit a fresh 6-1/2-year low on fears of reduced auto sector demand.

FUNDAMENTALS

Spot gold was little changed at $1,132.50 an ounce by 0031 GMT, after dropping 1.2 percent in the previous session.

A flurry of planned appearances this week by Federal Reserve officials began on Monday, but conflicting views by policymakers raised more questions about the US central bank’s ability to manage its message at a critical juncture.

William Dudley, head of the New York Fed, and John Williams, head of the San Francisco Fed, both signaled support for a rate hike this year, saying they expect inflation to rise towards the Fed’s 2-percent target. But Charles Evans, head of the Chicago Fed, took a far more dovish view, calling for rates to stay near zero until mid-2016.

Several other Fed officials are scheduled to speak this week, keeping the focus firmly on US monetary policy.

Traders will also be closely monitoring data, including non-farm payrolls due on Friday, to gauge the strength of the economy.

Non-interest-paying gold has lost about 4 percent this year on fears that demand could take a hit in a higher interest rate environment.

The rate hike fears outweighed any benefit that bullion could have received from a drop in the US dollar and equities.

Global equity markets and commodities slumped on Monday, pulled lower by worry over the economic health of China and other big emerging markets.

Market participants have been cautious ahead of a week of key economic data, including euro zone inflation on Wednesday, Chinese industrial and service sector PMIs on Thursday and US jobs figures on Friday.

Among other precious metals, platinum fell to $906.50 an ounce on Tuesday, its lowest since January 2009. The metal has been hit by fears the Volkswagen emissions scandal could dent demand for diesel cars, in which it is used in catalysts.

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