Gold price inches higher, but all eyes are now on Jackson Hole
London (Aug 23) Gold edged higher on Tuesday as markets shifted focus from hawkish comments by a Federal Reserve official at the weekend to a meeting of global central bankers this week, awaiting further guidance on US interest rates.
Spot gold rose 0.1% to $1,339.86 an ounce by 9.15am GMT, having hit a two-week low of $1,331.35 in the previous session. US gold was flat at $1,343.
Prices fell on Monday after weekend comments by the Fed’s number two policy maker, Stanley Fischer, who said the central bank was close to hitting targets for full employment and 2%, raising the prospect of a US rate increase.
"The gold markets took Fischer’s hawkish comments in its stride, there has not been much of a sell-off. The market is going sideways and in the context of those remarks that’s a good reaction," said Standard Bank analyst Tom Kendall.
US Federal Reserve chairwoman Janet Yellen may provide more clarity on interest rates at a speech during an annual meeting of central bankers in Jackson Hole, Wyoming, starting on August 25.
The Fed last week sent mixed messages in the minutes of its July meeting, though some members have suggested that rates could rise as soon as September.
"The market’s attention remains firmly focused on Friday’s Jackson Hole speech from Yellen," MKS PAMP Group said in a note.
The Fed increased rates for the first time in a decade in December, but expectations that it would hold off on further increases have helped to drive a 26% gain in gold prices this year.
Gold is highly sensitive to rising rates, which boost the opportunity cost of holding nonyielding bullion while lifting the dollar, in which it is priced.
The dollar fell 0.13% against a basket of major currencies, helping to underpin gold.
"Broadly speaking there is still a supportive environment for gold because the dollar index is increasingly breaking lower," Standard Banks’s Kendall said.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.25% to 958.37 tonnes on Monday.
Spot silver was up 0.9% at $19.04 an ounce, having fallen by more than 2% to its lowest in more than seven weeks on Monday. Platinum edged 0.7% higher to $1,104.40, while palladium gained 0.6% to $694.15.