Gold Prices off as Prospects for US Rate Hikes Weigh on Dollar

Gold Prices off as Prospects for US Rate Hikes Weigh on Dollar

Gold futures rose on Monday to the strongest level in nearly two weeks as the US dollar fell to its lowest level in several months as the prospect of a rate hike in the United States this year dwindled after more soft US economic data last week.

Comex gold futures were at $1,233.82 a troy ounce, up $6.30, or around 0.5%. It touched its highest since July 3 at $1,234.76 earlier.

Spot gold had risen 0.2 per cent to $1,230.43 per ounce.

Prices rose 1.5% last week as cautious comments from Federal Reserve Chairman Janet Yellin, along with soft inflation data, saw investors soften their outlook for tougher monetary policy in the US in the coming months.

Futures traders prices in less than 40% chance of a rate hike by the Fed at the end of the year, according to the monitoring tool Investing.com, down from about 50% in the previous week.

Investor risk sentiment picked up additional momentum after Chinese economic data easily outperform forecasts, with second-quarter gross domestic product rising 6.9 percent from a year earlier.

The dollar index, which measures the strength of the dollar against a basket of six major currencies, fell to a 10-month low of 94.86 in overnight trade. Most recently at 95.00 in early US trade.

At the same time, US Treasury 10-year Treasury yields fell to about 2.31%, while the highest levels of remains remained close to 2.39%, which was discussed earlier this month.

Economic reports will remain important next week as market players seek to measure the strength of the world’s largest economy and how this will affect the Fed’s monetary policy outlook.

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